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Investing.com -- Jefferies has double-upgraded Geberit (SIX:GEBN) stock to Buy from Underperform, citing improving European sentiment and the Swiss firm’s “superior fundamentals.”
The company’s shares rose nearly 2% in European trading Wednesday.
The move, which marks Jefferies’ “most anti-consensus call” in the sector, comes as the bank sees signs that investor perception may lag improving macro indicators across Germany and the broader region.
“With construction data and corporate commentary increasingly suggesting the worst may be over in Germany and more broadly Europe, sentiment towards Geberit still has scope to meaningfully improve to reflect this,” the analysts led by Priyal Woolf said.
Geberit, which generates roughly 90% of its revenue in Europe and about 30% in Germany, stands to benefit from a potential rebound in construction volumes.
Jefferies has revised its forecasts, pushing estimated EBITDA growth up by low teens per annum. The broker also believes its projections are low single-digits above consensus when adjusted for currency effects, driven by stronger organic growth assumptions in key markets.
The price target has been lifted to CHF 710 from CHF 374, implying a 23% upside. The upgrade reflects both improved earnings estimates and a reduced weighted average cost of capital, now at 6% from 7%, “to reflect lower risk of its high European exposure.”
Valuation remains elevated at 28.7x 2026 earnings, but Jefferies argues the premium is justified given Geberit’s “superior financial profile” and “sector-leading margin and return.”
“With this superior financial profile expected to persist, we see strong underpin for the multiple,” analysts wrote.
Analysts expect EBITDA margins to remain within the 28–30% range, supported by stable pricing power and flat input costs.
“While Geberit’s pricing power has come under scrutiny in recent years, our assessment of historical margin bridges and company-provided raw material trends suggests robust pricing power, giving comfort there is limited margin downside risk in an uncertain cost outlook,” analysts wrote.
Jefferies highlighted that the stock still carries the highest proportion of negative ratings in the sector, suggesting scope for a sharp rerating if momentum in European and especially German construction persists.