Citi upgrades EQT to "buy," shares jump 5% on strong earnings, fund outlook

Investing.com -- EQT AB (ST:EQTAB) shares climbed more than 5% on Thursday after Citi Research upgraded the Swedish private equity firm to “buy” from “neutral,” citing improved earnings visibility and strong exit momentum.

Analysts at Citi Research raised the 12-month target price to SEK335 from SEK270, implying a 15.4% expected share price return. 

The stock had already recovered nearly 30% from its mid-April lows, and Citi now sees further upside supported by fundraising progress and improved performance-related earnings.

EQT reported 14 exits year-to-date, nine of which came through public markets. Citi called the pace “impressive” given market conditions and said it supports confidence in future fundraising. 

The brokerage flagged ongoing efforts for key vehicles including the €23 billion-targeted EQT XI fund, which Citi expects to reach €24.5 billion, and infrastructure-focused Infra VII.

Citi increased adjusted EPS forecasts for 2025 to 2027 by 12–20%, primarily on higher performance-related earnings (PRE). 

Adjusted EBITDA for 1H25 is forecast at €794 million, in line with consensus, though analysts expect management’s tone during earnings to be more optimistic, which they believe could drive further upgrades.

For 2025, EQT’s adjusted net income is projected at €1.29 billion, with diluted EPS of €1.09. 

These are expected to grow to €2.42 billion and €2.05, respectively, by 2027. The company’s P/E ratio is estimated to decline to 12.8x in 2027 from 24.1x in 2025. 

Adjusted EBITDA is expected to increase from €1.59 billion in 2025 to €2.81 billion by 2027.

Despite a slight dip in fee-paying assets under management due to currency movements, Citi maintained a positive view on fee-related earnings (FRE) stability. 

The updated valuation implies EQT should trade at 19x 2026 earnings and 27x FRE, aligning with European peer CVC.

The analysts also flagged M&A optionality, referencing recent media reports linking EQT to a potential tie-up with sports investment firm Arctos. 

Additionally, Citi sees EQT as well-positioned to benefit from increasing investor interest in European alternative assets and recovering real estate demand.

Citi added EQT to its 30-day Catalyst Watch, ahead of expected earnings on July 17. The analysts noted their 2H25 adjusted EBITDA forecast is 8% above consensus, supported by higher anticipated PRE.