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Investing.com -- UBS in a note dated Tuesday upgraded Straumann Holding AG to “neutral” from “sell,” citing reduced downside risks and stabilizing investor sentiment following the company’s third-quarter results.
The upgrade comes as the dental implant maker’s shares rebounded more than 10% after reporting improved organic growth in North America and introducing new cost-saving measures aimed at protecting margins.
UBS analysts said Straumann’s stock, now trading around CHF101, is off more than 40% from its 2024 highs and is aligned with the bank’s new 12-month price target of CHF102, raised from CHF96.
The valuation is based on a 32x 2026 price-to-earnings multiple, representing a roughly 60% premium to the sector.
UBS said while the shares are still trading above the sector average, it no longer sees near-term catalysts that would drive a further derating over the next six to nine months.
The analysts noted that risks surrounding Straumann’s earnings outlook have become better understood and largely addressed by management.
UBS remains 2% to 8% below consensus sales estimates and 5% to 12% below consensus adjusted EBIT forecasts for 2026-2030, reflecting expectations for weaker Asia-Pacific growth and lingering margin pressures from China’s volume-based procurement (VBP) program, tariffs, and currency movements.
The brokerage said it expects those headwinds to be offset by the Swiss company’s cost initiatives, including moving some manufacturing to China and reducing losses in its ClearCorrect business.
UBS revised its revenue forecasts slightly lower by 0% to 1% for 2025-2030 to reflect a 10% VBP-related price cut in China, while adjusted EBIT forecasts changed by about 2%.
The analysts now project Straumann’s EBIT margin to stay near 24.7% in 2025 and rise gradually to 26.9% by 2029, supported by ongoing efficiency measures.
The brokerage’s updated discounted cash flow model raised the terminal margin assumption by one percentage point to 26%, keeping the weighted average cost of capital and terminal growth rate unchanged at 7.5% and 2.5%, respectively.
UBS forecasts a 7.1% group revenue CAGR for 2025-2030, in line with Straumann’s midterm margin targets but below its double-digit revenue growth guidance.
UBS said the next key event for investors is the company’s Capital Markets Day on Nov. 25, where it expects Straumann to reiterate its medium-term guidance.
With the shares now seen as fairly valued and limited downside risks in the near term, UBS said the balance of risk and reward has shifted, supporting the upgrade to “neutral.”