Jefferies upgraded Swiss vacuum valve manufacturer VAT Group to hold from underperform, citing the company’s exposure to China and a robust order backlog that mitigate further valuation compression.
The brokerage raised its price target by 15% to 646 Swiss francs from 560 francs, aligning with VAT’s prior-day close of 644 francs. The upgrade follows a roughly 15% de-rating in the stock’s two-year forward EV/EBITDA multiple since June, according to Jefferies analyst Om Bakhda.
VAT supplies vacuum components to both Western and Chinese semiconductor equipment manufacturers, with China accounting for approximately 30% of sales. The company’s diversified exposure reduces sensitivity to shifts in market share among equipment suppliers. Recent headlines regarding lithography localization in China further bolster the appeal of VAT’s position, Jefferies noted.
The brokerage shifted its valuation framework to a 2028 EV/EBITDA multiple of 24 times, replacing its prior price-to-earnings approach. Historically, VAT has traded at a 27% premium to semiconductor-capital-equipment peers on a two-year forward EV/EBITDA basis, though this premium has compressed alongside the recent de-rating.
Jefferies also highlighted VAT’s near-monopolistic position in valves and gross margins consistently above 60%, supported by growing vacuum content requirements in advanced chip designs. The company’s lower exposure to memory markets—where NAND investment has softened—has been offset by accelerated spending from TSMC on advanced logic, particularly for AI applications.
Despite cutting its 2026 and 2027 revenue estimates by 4% and 5% respectively, the brokerage reduced its 2026 EPS forecast by 9% and 2027 EPS by 13%, attributing the adjustments to higher operating-expense assumptions tied to production-ramp hiring rather than weaker demand. VAT reported 2025 revenue of 1.07 billion Swiss francs, EBITDA of 321.6 million francs, and EPS of 7.14 francs.
For 2026, VAT forecasts revenue of 1.32 billion francs, EBITDA of 447.3 million francs, and EPS of 10.67 francs. The company’s book-to-build ratio rose to 1.7 times in the second quarter of 2026, up from a historical average near 1 time, signaling elevated order momentum and backlog rebuilding.
While elevated order levels and backlog rebuilding could eventually raise inventory accumulation concerns, Jefferies views this as a future risk given supportive demand visibility for 2027.
