Gurit Shares Fall 11% After UBS Downgrade on 2027 Growth Concerns

Shares of Gurit (SIX:GUR) fell sharply on Friday, dropping as much as 11%, after analysts at UBS downgraded the Swiss composite materials manufacturer to neutral from a buy rating. The downgrade comes despite a spectacular year-to-date rally and reflects concerns that the company's growth is set to slow in 2027.

Rationale for the Downgrade

UBS analysts noted that while Gurit has performed exceptionally well, with its stock up approximately 400% year-to-date, the positive earnings revision cycle has likely concluded. The bank raised its price target for Gurit to CHF57 but cautioned that 2027 could be a "transition year" for the company.

The stock's surge was previously fueled by improved profitability following a restructuring of its wind business, strong performance in its manufacturing solutions segment, and new opportunities in the subsea defense market.

Anticipated Headwinds in 2027

UBS projects that several key business areas could face challenges in 2027, limiting further upside for the stock. The bank's primary concerns include:

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• Slowing Wind Materials Growth: The wind materials segment, which accounts for about 55% of Gurit's sales, is expected to see slowing growth in 2027. UBS estimates the company operates roughly two years ahead of offshore wind farm installations, and lower installations anticipated for 2028-29 will likely impact Gurit's order book sooner.
• Manufacturing Solutions Decline: Sales from manufacturing solutions, representing about 15% of group revenue, are projected to decrease in 2027. This is attributed to volatile capital expenditure plans from customers and difficult year-over-year comparisons.
• Limited Margin Expansion: The positive impact of recent restructuring efforts is expected to fade, limiting the potential for further margin expansion in 2027.

Revised Outlook

Despite the downgrade, UBS maintains a constructive medium-term view on Gurit, citing long-term potential in the wind and defense sectors. The bank made minor adjustments to its earnings per share estimates for 2026-28, trimming 2027 growth projections while raising its 2028 outlook on the strength of the defense business.

Reflecting confidence in the company's improved operational stability, UBS also increased its terminal EBITDA margin forecast by 50 basis points to 10%. This suggests a belief that Gurit is now better positioned to protect its profitability than it was in the past.