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Investing.com - UBS downgraded LEM Holding SA (SWX:LEHN) from Buy to Neutral on Thursday, while significantly reducing its price target to CHF800.00 from CHF1,100.00 following disappointing first-quarter results.
The Swiss investment bank reduced its top-line estimates for the company by 13% and adopted a cautious stance on margins. UBS lowered its operating profit (EBIT) estimates for fiscal years 2026-2028 by an average of 33%, driving the substantial price target reduction.
UBS anticipates potential delays in LEM Holding’s mid-term sales target of CHF600 million by fiscal year 2029/2030, along with increased structural pricing pressure in the company’s markets.
Under the revised estimates, LEM trades at a premium valuation with a 2027 estimated price-to-earnings ratio of 28x, which is 20% above the median of Swiss peers, yet approximately one standard deviation below its historical average.
While UBS believes margins have bottomed out for the electrical components manufacturer, the bank considers the risk-reward profile balanced and prefers to wait for clearer signs of improvement in end markets before reassessing its outlook.
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