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Investing.com -- Nemetschek AG (ETR:NEKG) received an upgrade from Berenberg, which raised its rating on the German software group to “buy” from “hold” and increased its price target to €125 from €117.
The brokerage said its earlier concerns over investor sentiment and valuation have now eased, leading to a more constructive view of the company’s growth prospects.
Shares of Nemetschek closed at €108.30 on Xetra on October 1, giving the company a market capitalization of €12.5 billion.
The new target implies an upside of about 15%. Nemetschek’s stock has dropped more than 20% since reaching an all-time high in August, a pullback that Berenberg said has made the valuation more reasonable relative to the DAX.
The brokerage noted that Nemetschek’s forward price-to-earnings premium to the German benchmark is now at one of the lowest levels since 2018.
Berenberg said discussions with management at its German Corporate Conference in Munich in September reinforced confidence in Nemetschek’s mid-term growth potential.
The adoption momentum of the company’s Bluebeam software and opportunities such as expanding its build business in Europe and upselling GoCanvas to Bluebeam customers were cited as key drivers.
The brokerage said it has lifted its 2026 and 2027 sales growth forecasts by about 1 percentage point on average.
The brokerage also said investors appear to understand potential near-term growth headwinds tied to multi-year agreements signed in the first half of the year, reducing the risk of an expectation gap.
For the full year 2025, Nemetschek is expected to report revenue of €1.18 billion, up from €996 million in 2024. EBITDA is forecast at €366 million, with net income seen at €217 million.
Earnings per share are projected at €1.86, rising to €2.28 in 2026 and €2.79 in 2027. Berenberg expects free cash flow to increase from €240 million in 2023 to €410 million in 2027.
Margins are also set to expand, with the EBITDA margin expected at 31.0% in 2025, rising to 32.5% by 2027. The EBIT margin is forecast to improve from 23.5% in 2024 to 27.5% in 2027.
Berenberg values Nemetschek at a 47x free cash flow multiple and highlighted its strong competitive moat in the architecture, engineering and construction software market.
The brokerage projects compound annual growth of 14% for sales and 22.6% for earnings per share between 2025 and 2027.
Nemetschek, which also operates in media and entertainment software, remains majority-controlled by the Nemetschek family, which holds 51.1% of shares. The stock’s 52-week range is between €91.90 and €137.70.