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Investing.com -- UBS has initiated coverage on Ionos with a “buy” rating and a 12-month price target of €47, citing structural tailwinds and upside potential across its business segments, especially in Web Presence and Productivity (WP&P) and Cloud services.
The report identifies WP&P as the core of Ionos’ operations, expected to contribute 63% of 2025 revenue and over 90% of EBITDA.
UBS forecasts a mid-term compound annual growth rate (CAGR) of 6.4% in this segment, largely driven by up-selling and cross-selling within the existing customer base.
Additional growth could come from volume expansion and selective price increases, although the latter is not currently included in the base case projections.
UBS notes that despite previous double-digit price hikes negatively affecting net promoter scores, customer sentiment has since recovered, leaving room for potential future pricing adjustments.
In the Cloud segment, which has historically been a drag on overall profitability due to high capex and reinvestment strategies, UBS sees underappreciated upside. The Cloud unit is projected to grow in line with the European market at a 12.5% CAGR.
However, UBS points to several catalysts that could accelerate this growth, including the ongoing ramp-up of the ITZBund contract with the German government and broader tailwinds from EU digital investments and sovereignty-related policies.
The report states that Ionos could begin generating positive EBITDA from this segment as early as 2026.
The valuation presented combines a discounted cash flow (DCF) analysis, which yields a value of €44 per share, and a peer-based comparison with GoDaddy (NYSE:GDDY), resulting in a €49 valuation.
The €47 price target reflects the midpoint of these two approaches. Ionos currently trades at a forward P/E of 25.5x for 2025, representing a 10% discount to GoDaddy. UBS argues that this gap should narrow given Ionos’ higher expected EPS growth and comparable return on capital metrics.
The recent rally in Ionos shares, which have risen over 80% year-to-date, was attributed to increased liquidity following a stake sale by Warburg Pincus, upgraded Q1 guidance, and inclusion in thematic “AI baskets” by investors.
UBS maintains that despite the rally, further upside remains due to strong fundamentals and growth potential, particularly as Ionos approaches a near-zero leverage position that may enable acquisitions or share buybacks.