Shares of Aryzta AG fell 6% on Thursday after UBS downgraded the Swiss bakery group to sell from buy, citing concerns over weaker growth and margin outlook.
UBS reduced its 12-month price target on Aryzta to CHF40 from CHF70, reflecting a more cautious valuation stance. The bank also cut its earnings-per-share forecasts for 2026 through 2028 by between 2% and 9%, positioning its estimates 2% to 12% below consensus, with an estimated 5% to 10% downside risk to earnings.
The downgrade follows adjustments to UBS’s valuation model, including a 200-basis-point increase in the discount rate to 9% and a 50-basis-point reduction in the medium-term sales growth assumption to zero. The bank also lowered its EBITDA margin assumption by 50 basis points to 13%, projecting a 13.8% margin in 2028, below Aryzta’s internal target of over 15%.
Aryzta’s exposure to Germany, which accounts for roughly 25% to 30% of group sales, has come under pressure. Sales in the country declined about 10% year-on-year in the first half of 2026, while bakery product prices in Germany have remained broadly flat since early 2024. Aryzta reported a mild negative price decline in Europe during the same period.
UBS Evidence Lab survey data indicates rising headwinds from GLP-1 weight-loss drugs, with about 57% of U.S. users reducing bread and pastry consumption as of March 2026, up from 38% in January 2024. Approximately 35% of Aryzta’s sales are tied to sweet baked goods and morning products, sectors likely to face sustained demand pressure.
The bank’s downgrade contrasts with Aryzta’s guidance of low-single-digit organic sales growth, highlighting a divergence in expectations for the group’s near-term performance.
