UBS Upgrades Kingspan Group
UBS announced on Wednesday that it upgrades Kingspan Group plc to a "buy" rating from "neutral" and raises its target price to €130, up from the previous €80 target. The upgrade is driven by the rapid expansion of Kingspan’s datacenter business, which UBS believes is not yet reflected in the company’s share‑price multiple.
Datacenter Business Growth
The datacenter operation, housed within Kingspan’s Advanced Building Systems (ADVNSYS) segment, is expected to increase its contribution to group earnings before interest, tax and amortisation (EBITA) from roughly 10% in 2025 to about 35% by 2027. UBS notes that this level of growth is unprecedented in the sector.
Earnings and Valuation Adjustments
UBS lifted its 2027‑2029 earnings‑per‑share (EPS) forecasts by 17% to 29%, positioning its estimates 5%‑10% ahead of the consensus Street forecasts. At the new €130 target, UBS projects the shares would trade at approximately 23 times the estimated 2027 price‑to‑earnings (PE) ratio, which sits at the upper edge of the long‑term 17‑23× range. The implied enterprise‑value‑to‑EBITDA multiple would be about 14×, compared with a historical range of 11‑16×.
Comparative Multiples and Margins
UBS calculates that, based on the current share price and assuming the Insulated Building Envelope segment trades at its historic average multiple, the ADVNSYS segment would be valued at an EV/EBITDA multiple of 10‑11×, placing it at the very low end of a peer group of 16 identified datacenter‑equipment companies. The firm also expects ADVNSYS EBITA margins to expand from roughly 11% in 2025 to 17%‑18% within two to three years, aligning more closely with peers that command 20%‑80% premium valuations.
Jefferies’ Parallel Upgrade
A day earlier, Jefferies upgraded Kingspan to "Buy" from "Hold" and increased its price target to €140, up from €103.90. Jefferies forecasts a 2027 trading profit of €1.50 billion, which is 12.5% higher than the Visible Alpha consensus average of €1.33 billion. The brokerage attributes its optimism to the same ADVNSYS growth trajectory and to Kingspan’s recent acquisition of BMC.
Valuation Assumptions
UBS’s revised target price is derived from a discounted cash‑flow (DCF) model that retains a weighted average cost of capital (WACC) of 7.5% and a terminal growth rate of 2%, both unchanged from its prior analysis.
Risk Considerations
UBS includes a primer on the ADVNSYS division and the BMC acquisition, outlining product lines, competitive landscape, technological risks, and strategic value. The bank also flags the risk that Kingspan may be “riding a datacenter wave that could break at any time.”