On Monday, VAT Group AG (VACN:SW) stock received an updated rating from Barclays, moving from Underweight to Equalweight. Alongside the upgrade, the price target for the company was also increased to CHF399 from CHF343.
The adjustment comes after a period of underperformance by VAT compared to the S&P Europe 350 Index (SXNP) and the Philadelphia Semiconductor Index (SOX) year-to-date.
The analyst noted that over the last nine months, VAT Group’s earnings revisions for 2024 experienced a high single-digit percentage decrease, while the 2025 earnings revisions saw a low single-digit percentage increase. Despite these mixed revisions, VAT Group’s stock has re-rated approximately 40% during this period.
The second-quarter earnings season revealed an earnings miss, third-quarter revenue guidance below consensus, and full-year margins at the lower end of the guidance range.
The evaluation of VAT Group’s performance also took into account the broader market concerns, including risks associated with China and the return on investment in artificial intelligence.
The analyst indicated that the recent underperformance has been factored into the current valuation, leading to a more favorable view of the stock’s future prospects.
Barclays now anticipates limited negative earnings revisions for VAT Group going forward. The new price target of CHF399 is based on a 35 times price-to-earnings ratio for the year 2025, which is derived from both historical trading ranges and implied multiples from reverse discounted cash flow models. The analyst concluded that with a more appealing valuation, there is no longer a reason to maintain an Underweight stance on the stock.
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