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On Tuesday, UBS analyst Charles Eden upgraded Novonesis A/S (NSISB:DC) from Neutral to Buy, adjusting the price target to DKK530.00, up from DKK450.00. The upgrade follows Novonesis’ first quarter results for 2025, which Eden believes demonstrate the company’s capacity to sustain its accelerated organic sales growth (OSG) following the merger between Novozymes (OTC:NVZMY) and Chr Hansen.
Eden’s optimism is based on the company’s OSG, which is forecasted to reach 8.3% in 2025, surpassing the average growth rate of approximately 5% for the rest of UBS’s global Ingredients coverage, excluding AAK. Notably, AAK is expected to see a double-digit contribution from pricing. Additionally, Novonesis’ projected volume growth of 7.3% for 2025 is the highest within the same coverage, compared to an average of 3.4%, or 4.1% excluding AAK.
The UBS analyst also highlighted Novonesis’ robust EBITDA margin, which stood at 36.1% in 2024 and further increased to 38.3% in the first quarter of 2025. This margin is considerably higher than the peer average of 20.9% in 2024, with only Givaudan having the second-highest margin at 24.5%. The strong margin profile of Novonesis is anticipated to support a re-rating of the company’s valuation multiple alongside continued earnings growth, with UBS estimating a year-over-year PPA adjusted EPS growth of 23% for 2025 and 10% for 2026.
Looking ahead, Eden pointed to the upcoming half-year 2025 results, scheduled for release on August 21, 2025, as a potential positive catalyst for Novonesis shares. UBS expects the company to outperform consensus forecasts for the second quarter OSG, projecting an 8.9% increase versus a consensus estimate of 8.0%. Additionally, the introduction of medium-term financial targets for the period of 2026-2030 is also expected to be well received by the market.
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