Oerlikon
Note: This is a daily stock update and the information stands true as of 07/07/26, 09:00 CET
Company Update:
Oerlikon's share price rose 8% yesterday after another broker updated its model and became more positive on the stock. The broker expects strong growth, supported by higher metal surcharges. However, in our view, this is only a temporary/one-off effect.
As a result, the share price has now almost reached our target price of CHF 4.67. The re-rating we were expecting has largely taken place.
We therefore do not see much additional upside from current levels. Consequently, we are moving to a Reduce recommendation and believe it is time to start taking profits.
That said, there is no urgency. We believe the H1 results could be a positive surprise. However, we think much of this potential surprise was already priced in yesterday's share price reaction. The market appears to be expecting a guidance upgrade, but we do not think this will happen, as management is unlikely to want to overpromise.
In our view, management would be more likely to raise guidance during the Capital Markets Day if tungsten prices remain at elevated levels. However, this is difficult to predict, as it largely depends on the evolving relationship between the US and China, with negotiations expected to intensify in November.
To sum up: we expect H1 results to be strong and potentially ahead of expectations. However, the outlook beyond that may become more challenging. Therefore, we believe investors can start taking profits at current levels.
Expert Opinion:
We like the call and the discipline. Momentum is strong in the name and will likely remain so into early August. Yet our analyst believes that the stock is now fairly valued (PE 26 and 27 of 26.3x and 23.5x respectively). There is a possibility that the company increases its FY guidance in September at the CMD, but only if the Tungsten price remains elevated, which would also negatively impact demand. So in all, we believe the risk-reward on the name is now less favorable.
For daily updates, subscribe to our newsletter and for detailed information, reach out to us at sales@alphavalue.eu
We like the call and the discipline. Momentum is strong in the name and will likely remain so into early August. Yet our analyst believes that the stock is now fairly valued (PE 26 and 27 of 26.3x and 23.5x respectively). There is a possibility that the company increases its FY guidance in September at the CMD, but only if the Tungsten price remains elevated, which would also negatively impact demand. So in all, we believe the risk-reward on the name is now less favorable.
For daily updates, subscribe to our newsletter and for detailed information, reach out to us at sales@alphavalue.eu
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