Goldman Sachs Upgrades Umicore to Buy, Sees 47% Upside

Goldman Sachs Upgrades Umicore on Strong Metals Outlook

Goldman Sachs has upgraded materials technology company Umicore to “buy” from “neutral,” increasing its 12-month price target to €33 from €21. This new target represents a potential upside of 46.9% from the stock's recent closing price of €22.46.

Analysis of Core Divisions

The upgrade is primarily driven by significantly higher earnings estimates for Umicore’s Recycling and Specialty Materials divisions. Goldman projects the company’s Recycling EBITDA to be approximately 26% above consensus estimates through 2026-28, citing a more optimistic outlook on hedged metal prices including platinum, palladium, and rhodium.

Key Drivers and Financial Impact

In the Specialty Materials division, the bank raised its 2026 revenue growth forecast to 40%, a substantial increase from the consensus of around 5%. This outlook is fueled by soaring prices for key materials like cobalt and germanium. As Umicore’s hedging coverage moderates, the company is expected to realize more profit from strength in spot metal prices.

Outlook Summary

Reflecting this positive view, Goldman's estimates for Umicore's group adjusted EBITDA are 10-19% ahead of market consensus for 2026-2028. The bank notes the stock currently trades at a 30% discount to its 10-year average valuation, suggesting a favorable entry point.

FAQ

Q: Why did Goldman Sachs upgrade Umicore?
A: The upgrade is based on higher earnings forecasts for its Recycling and Specialty Materials divisions, driven by strengthening metal prices like cobalt and germanium.

Q: What is the new price target for Umicore stock?
A: Goldman Sachs set a new 12-month price target of €33, implying a 46.9% upside from its recent closing price.

Source: Investing.com