Investing.com — Buzzi Unicem (BIT:BZU) stock dropped 2.3% on Tuesday after UBS downgraded the cement manufacturer to Neutral from its previous rating, citing limited upside potential following a significant re-rating of the company’s shares.
The Swiss investment bank pointed to a “more subdued estimate momentum backdrop” based on its end market analysis and questioned Buzzi’s decarbonization strategy. UBS noted that the company’s valuation has increased substantially, with its consensus EV/EBITDA multiple rising from 3.6x in Q4 2023 to 6.6x currently.
While acknowledging Buzzi’s strong balance sheet with an estimated €1.1 billion in net cash by 2025 and its exposure to the German market, which represents over 10% of EBITDA and offers growth prospects from infrastructure stimulus, UBS analysts believe the upside is now more limited.
The downgrade also highlighted concerns about Buzzi’s approach to decarbonization, with UBS stating the company is “lagging EU listed peers in terms of decarbonisation investments” and carbon capture plans. Approximately 40% of Buzzi’s EBITDA comes from countries under the EU Emissions Trading System.
Following its analysis, UBS cut its 2025 EBITDA and EPS estimates by 7% and 10% respectively, while reducing 2026 forecasts by 3% and 5%. The bank set a price target of €52 for Buzzi shares.
The downgrade comes amid ongoing investor questions about Buzzi’s capital allocation priorities, with UBS noting the company’s “inefficient net cash balance sheet” and “limited ambition to increase dividends” as factors contributing to its trading discount relative to peers.
Read more on Investing.com India
