Accelleron shares up on UBS estimate revision after IMO net-zero delay

Investing.com -- Shares of Swiss industrial equipment provider Accelleron (SIX:ACLN) rose on Monday after UBS Global Research revised its earnings and sales estimates for the industrial equipment maker following a 12-month delay in the International Maritime Organization’s (IMO) Net-Zero Framework.

The UN-associated body announced Friday that voting on the adoption of the framework, which aims to reduce global shipping emissions, would be postponed by a year. 

The framework includes a greenhouse gas emissions (GHG) pricing mechanism and global fuel standards, measures UBS said were expected to boost demand for Accelleron’s turbochargers, fuel injection pumps, and routing software. 

With the delay, UBS shifted its assumptions for regulatory-driven demand, now expecting top-line support for Accelleron starting in fiscal year 2027, instead of fiscal 2026, and a more gradual phase-in thereafter.

UBS revised its earnings per share forecasts in Swiss francs to reflect the delayed demand tailwind. Adjusted EPS estimates remain unchanged for FY25 at current levels but were lowered by 4% for FY26 and 3% for FY27. 

The brokerage also reduced its price target to CHF69 from CHF75 while maintaining a Buy rating on the company.

The IMO’s planned GHG pricing mechanism is designed to encourage emission reductions across global shipping fleets. 

Under the proposal, fleets exceeding IMO-defined emission thresholds would be required to purchase “remedial units,” with costs ranging from $100 million to $380 million per ton of CO2 depending on the level of non-compliance. Fleets below thresholds can generate “surplus units” that may be traded. 

UBS estimated that funds linked to the emission trading scheme could exceed $10 billion annually once fully adopted, potentially increasing demand for emission-reducing equipment like that produced by Accelleron.

UBS also updated its operating margin forecasts, noting that business mix and operating leverage are key drivers of profitability. 

The brokerage now expects adjusted EBIT margins of 25% for FY25, 25.3% for FY26, and 26% for FY27.

Valuation was updated using a discounted cash flow model incorporating the revised FY25-29 estimates, a terminal sales growth assumption of 2.5%, and a weighted average cost of capital of 7.2%. 

UBS’s revised price target of CHF69 reflects these changes, down from the previous CHF75.