Investing.com -- Comet was upgraded to “buy” from “neutral” rating with a new price target of CHF252, up from CHF199, driven by significantly stronger expectations for the semiconductor equipment market and the resulting projected lift to the company’s revenues and profitability, according to the UBS in a note dated Monday.
The upgrade is tied to newly revised forecasts from UBS’ global semiconductor team, which now expects wafer fab equipment spending to reach $114 billion, $139 billion and $148 billion in 2025, 2026 and 2027, representing 17%, 22% and 6% year-over-year growth.
These spending levels, described in the report as “unseen in the past,” are expected to support demand for Comet’s semiconductor-focused Plasma Control Technologies segment, which has historically shown a close relationship between wafer fab equipment spending trends and organic sales performance.
The brokerage states that PCT contributes 47% of group sales and 81% of EBITDA on average, giving the semiconductor cycle significant weight in Comet’s financial trajectory.
UBS now anticipates an organic sales compound annual growth rate for the segment of roughly 19% between fiscal years 2025 and 2029, compared with about 10% over the last decade.
These revenue expectations support a material improvement in profitability. The report projects a group EBITDA margin increase to 23.6% by FY29, compared with 11.5% in FY25, driven by operating leverage and a rising share of sales from the higher-margin semiconductor division.
At the group level, UBS estimates a 16% organic sales CAGR from FY25-29, along with revenue growth from CHF464 million in FY25 to CHF800 million in FY29.
The analysts describe the current share price as inconsistent with those growth prospects, citing a reverse-DCF indication that the market is pricing in materially lower expectations.
The revised DCF valuation, maintaining a long-term 2.5% sales growth assumption and a 7.9% WACC, yields the new CHF252 price target.
The brokerage flags that semiconductor equipment manufacturers Lam Research and Applied Materials, identified as major customers for Comet’s PCT business, have also seen significant upward revisions to projected system revenues, further reinforcing the expected demand outlook.
The analysts note that, based on UBS estimates and recent share prices, Comet trades at an EV/EBIT multiple of 18.3x for next year, above its long-term historical average, which UBS says reflects the upgrade’s assumptions for stronger financial performance.
