J.P. Morgan initiates Geberit coverage at 'underweight,' sees 11% downside

Investing.com -- J.P. Morgan has initiated coverage of Geberit (SIX:GEBN), the Swiss-based sanitary products leader, with an "underweight" rating and a December 2026 price target of CHF 450. 

This valuation implies an 11% downside from the current stock price of CHF 504.60, reflecting the brokerage’s view that Geberit’s high valuation does not adequately account for key challenges and risks.

Analysts at J.P. Morgan said that Geberit is trading at a valuation premium—5% above its long-term average and 61% higher than peers in the European Lightside sector. 

Despite this, the company’s earnings momentum remains subdued, with 2025 EBITDA projections falling 3% below consensus. 

J.P. Morgan's research highlights that Germany, Geberit's largest market (29% of revenue), faces a challenging outlook due to the construction sector lagging behind broader European growth.

Additionally, the analysts noted Geberit’s limited exposure to energy-efficient renovation products, a key driver in Europe’s building sector due to the European Commission’s Renovation Wave strategy.

J.P. Morgan further observed that while Geberit is positioned as a volume recovery play, it is likely to experience a late-cycle recovery. 

The potential benefits of increased demand could be offset by higher operational costs, constraining margin expansion. 

Current EBITDA margins are forecast to remain flat at 29.6% in 2025, slightly below 2023 levels. 

Although Geberit’s financials suggest headroom for shareholder returns through buybacks, the existing share repurchase program, capped at CHF 300 million over two years, appears unlikely to expand significantly.

J.P. Morgan acknowledges Geberit's strong reputation but believes its current valuation is not attractive for investment. 

The analysts flag risks from the macroeconomic environment, raw material availability, and competition, further supporting their cautious view.