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Investing.com -- UBS raised its rating on Bechtle shares to Buy from Neutral, pointing to signs of a turnaround in its core German market and expectations of stronger growth underpinnings.
According to the bank’s analysts, the first quarter marked a trough in Bechtle’s operations, with improving public sector orders and a recovering PC cycle supporting the case for a rebound.
“We see many reasons to like the shares today,” the analysts led by Christopher Tong wrote, highlighting that April orders were up double digits and that Germany’s economic stabilisation should catalyse IT spending.
The report also emphasized that Bechtle is poised to benefit from the €500bn German infrastructure fund.
“Germany’s €500bn infrastructure fund, of which digitalisation is a part, is set to be a sizable tailwind for Bechtle which generated c.60% of FY24 revenues from Germany,” the analysts noted.
Alongside the upgrade, UBS also lifted its price target to €45 from €37.50, implying a 20x 2026 price-to-earnings (P/E).
The firm believes the market is not fully pricing in Bechtle’s growth potential, estimating a 5.9% revenue compound annual growth rate (CAGR) for 2025–2029 based on current valuation levels, versus UBS’s forecast of 7.7%.
While Q1 results were weak—organic revenue fell 5%—UBS pointed to green shoots, particularly in April, and expects operations to progressively improve.
The PC refresh cycle is also seen as a driver of near-term growth. Tech giant Microsoft (NASDAQ:MSFT) said publicly that “in Germany, some 9 million devices must be replaced because you can’t run Windows 11 on them.”
The note flagged that Bechtle’s public sector exposure and a new government in Germany should further lift sentiment and spending. UBS also sees upside to Bechtle’s full-year guidance range of -3% to +3% organic revenue growth, viewing it as “conservative given the cyclical rebound and strong structural growth underpinnings.”
“Given the return to growth to its historical average we don’t think the market is pricing in this opportunity fully with the shares trading 17% below its historical P/E of 23x,” the analysts said.