At its investor day, the St. Gallen-based group lowered its revenue forecast for 2027. The forecast is now set at between 1.5bn and 1.7bn Swiss francs, down from the previous range of 1.8bn to 2.2bn. This is a downward revision, but it should not really break the momentum of growth seen since 2023: annual revenue growth is expected to be between 10% and 15% between 2025 and 2029.
VAT Group intends to maintain strong profitability despite the slight downward revision of its target range, with an EBITDA margin of between 30% and 37%, compared with 32%-37% previously. On the other hand, the target conversion rate of operating income into free cash flow – the cash actually available at the end of the financial year – has been raised to 60%/70%.
The Swiss company remains dependent on the cyclical nature of the semiconductor market, more specifically on the manufacture of wafers, the ultra-pure silicon plates on which chips are engraved. However, VAT has been gaining market share in vacuum pumps for several years: 75% in 2024. This scenario is expected to continue, with Barclays analysts forecasting 85% in 2029. To meet demand and maintain this position, the group has significantly increased its industrial capacity and R&D spending. New opportunities could drive future growth, such as valves for the manufacture of OLED screens, a market with strong potential and expected annual growth of over 20%. VAT aims to double its share in this specialty from 43% today to over 70%. Services activities could also play a role in future diversification and provide a recurring source of revenue.
Investors have not reacted harshly to the lowering of targets. The stock closed down 2.7% on Tuesday. Analysts remain broadly confident about the stock's value. The second half of the year could hold some positive surprises, especially as the company is well positioned to capitalize on the wave of technological innovation driven by artificial intelligence.
