Also Holding AG shares jump 7% as UBS starts coverage with “buy” rating

Investing.com -- Also Holding AG (SIX:ALSN) shares jumped over 7% on Tuesday after UBS Global Research’s initiated coverage on the stock with a ’buy’ rating.  

UBS Global Research analysts have a positive outlook on Also Holding AG. They flagged that Also is the 2nd largest European IT distributor, operating as a crucial link between over 800 hardware/software vendors and more than 135,000 resellers.  

The European IT market, in which Also is a key player, is expected to grow at a 7% CAGR over the medium term.

Mergers and Acquisitions have been a major growth driver for Also, contributing nearly 400 bps annually to top-line growth over the past 12 years. 

The recent acquisition of Westcoast, Also’s largest acquisition yet, is projected to add about €4 billion in sales, which is more than 40% of Also’s FY24 revenues. This acquisition is expected to position Also as the 2nd largest IT distributor in Europe.  

UBS Global Research provides several reasons for their buy rating. They anticipate a re-acceleration in revenue growth in 2025, following a few challenging years. 

The consolidation of Westcoast is expected to increase Also’s scale, and continued margin expansion is also expected.  

While revenue growth and EBITDA were weak in 2024 due to a muted IT spending environment and tough comparisons, UBS analysts foresee a rebound in 2025. This rebound is expected to be driven by easier comparisons and the PC refresh cycle. 

Also is well-positioned to benefit from the PC refresh cycle, with over 25% of its revenues tied to PCs. Grace Chen from 

UBS projects PC unit growth of 5% in 2025, a jump from 0.9% in 2024. The trend in AI PCs is also expected to boost pricing, with Gartner (NYSE:IT) estimating that 43% of PCs sold this year will be "AI-ready".

UBS Global Research expects revenue growth of 46% in FY25, primarily driven by Westcoast, with about 8% being organic growth. 

They also forecast FY25E EBITDA of €316 million, which is above consensus estimates of €309 million and towards the higher end of the €285 million - €325 million guidance.  

EBITDA margin has increased from 1.8% in 2015 to 2.5% in 2024, driven by a focus on the higher-margin and faster-growing Solutions and Services business lines. 

Although a slight decrease to 2.3% is expected in 2025 due to the consolidation of Westcoast, UBS anticipates a steady margin improvement to 2.5% by 2029. 

The company sees further potential for cost optimization in logistics and personnel expenses, and synergies from Westcoast are expected to provide additional upside.  

UBS Global Research has set a price target for Also Holding AG of CHF 320, based on an equally weighted 19x 2026E P/E and DCF, assuming a 7.8% WACC, 1.5% terminal revenue growth rate, and 2% terminal EBITDA margin.