UBS Upgrades Technogym to 'Buy' Citing Valuation Reset and Stable Earnings

UBS upgraded Italian fitness equipment maker Technogym (TGYM) to "Buy" from "Neutral" on Wednesday, arguing that a recent sharp valuation reset has created an attractive entry point for investors. The bank's analysts noted that consensus earnings expectations for the company have now stabilized after a period of downward revisions.

The Analyst's Thesis

In its note to clients, UBS raised its 12-month price target on Technogym shares to €21.30 from €21.00. The bank said the stock's risk-reward profile is now more compelling, highlighting that it trades at approximately 11 times its estimated 2027 enterprise value to EBITDA (EV/EBITDA).

Investor caution had grown since the stock peaked in mid-May due to concerns over slowing growth and inflationary pressures. However, UBS stated its confidence has increased that, barring a significant economic deterioration, the downside risk to earnings is now more limited.

Demand Remains Strong Despite Headwinds

Technogym's first-half results supported the bank's more optimistic view. The company reported revenue of €493 million and adjusted EBITDA of €86 million, figures that were broadly in line with UBS estimates.

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Crucially, UBS attributed a slowdown in second-quarter growth to delivery disruptions, such as international shipment delays, rather than to weaker underlying demand. The bank's discussions with management indicated that order intake and backlog are growing at a double-digit rate across all regions, supporting visibility for the second half of the year.

Margin Pressures and Outlook

Profitability faced headwinds in the first half, with the adjusted EBITDA margin declining by 110 basis points to 17.4% due to higher freight and procurement costs. To address this, Technogym introduced a mid-single-digit price increase in July, which UBS expects will help offset inflation, with benefits becoming more visible from the fourth quarter.

While UBS lowered its 2026 margin forecast to reflect ongoing cost pressures, it modestly raised its earnings forecasts from 2027 onward. The bank identified Technogym's third-quarter results as the next potential catalyst for the stock.