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Investing.com -- UBS on Tuesday upgraded Bachem Holding AG, the Swiss peptide and oligonucleotide manufacturer, to “buy” from “neutral,” raising its 12-month price target to CHF78 from CHF76 after increasing mid-term revenue, EBITDA and EPS estimates.
The brokerage said the stock’s pullback since the first half of the year created an opportunity to re-enter a company with “high visibility” on long-term expansion, supported by committed customer contracts and a multi-year capacity buildout.
The brokerage said Bachem’s valuation appeared attractive relative to global CDMO peers, noting the shares trade at 19.2x EV/EBITDA 2025E, in line with the group despite UBS forecasting 19% sales CAGR and 20% EPS CAGR through 2030.
UBS said the market remained influenced by wider geopolitical uncertainty rather than changes in Bachem’s fundamentals and wrote that meeting FY25 and FY26 consensus could help drive a re-rating.
At the core of the upgrade is Bachem’s planned about CHF2 billion capex program through 2029, including CHF1.5 billion for growth and CHF0.5 billion for maintenance, underpinned by customer prepayments that UBS expects to reach around CHF0.5 billion by 2029.
The expansion covers several sites: the CHF750 million-1 billion Sisslerfeld project targeted for commercial start in 2030, the CHF250 million Vista expansion through 2030, and ongoing work at Building K in Bubendorf.
UBS said Building K, which completed its Swissmedic inspection in November, remains on track for GMP production and a commercial ramp-up in 2026.
It estimates CHF230 million in FY26 sales from Customer A and CHF60 million in FY26 development sales from Customer B, with additional Building K capacity supported by Bachem’s pipeline of 170 new chemical entities, including 12 Phase 3 projects at end-2024.
The brokerage forecasts Bachem’s revenue to rise from CHF605 million in FY24 to CHF702 million in FY25, CHF969 million in FY26 and CHF1.154 billion in FY27, supported by an expected around CHF1.7 billion in incremental long-term revenue generated by the expansion program.
UBS raised its EBITDA estimates to CHF202 million for FY25, CHF288 million for FY26 and CHF360 million for FY27, with margins improving from 28.7% in FY25 to 31.2% in FY27. EPS forecasts rose to CHF1.60, CHF2.30 and CHF2.90 for FY25-27.
The brokerage said most of Bachem’s expansion capex is “de-risked,” with a significant portion of future capacity tied to minimum order commitments and prepayment structures. It said the outlook for peptide and oligonucleotide manufacturing-supported by GLP-1 market growth, underpins Bachem’s sustained double-digit growth visibility.
UBS noted risks including delays in capacity expansion, pressure on GLP-1 drug pricing, potential in-house production increases by pharma, and prolonged negotiations at Sisslerfeld. Still, the brokerage said progress at Building K and secured customer projects strengthened execution confidence and supported the upgrade.