SGS: 1H‘26: Accelerating 2Q growth trends of 5.9%, margins of 15.1% in line and guidance reiterated, albeit with slightly higher restructuring costs

Research evidence excerpt

SGS: 1H‘26: Accelerating 2Q growth trends of 5.9%, margins of 15.1% in line and guidance reiterated, albeit with slightly higher restructuring costs

Victoria K Chang AC Europe Equity Research

(44-20) 7134-5439 24 July 2026 J P M O R G A N

victoria.kx.chang@jpmorgan.com

Investment Thesis, Valuation and Risks

SGS (Overweight; Price Target: CHF120.00)

Investment Thesis

Since the appointment of Géraldine Picaud as CEO in March 2024, SGS has delivered good

execution of margin uplift measures (albeit from historically low levels) and acceleration

of M&A. With SGS’s balanced revenue exposure as well as its relatively high share of lab-

based activities (where we think there are more operating leverage opportunities), our

research suggests that SGS can deliver the strongest EPS growth in 2026 among the TIC

names. We think the better EPS growth trends vs. history can support the continued re-rating

of its shares.

Valuation

We value SGS using a DCF model. We use a WACC of 6.9% and a 1.5% terminal growth

rate.

Figure 2: Our Dec-27 price target is CHF 120

EV to equity bridge

Price Target CHFm

Total present value of cash flows 10,248

Terminal value 16,845

Enterprise Value 27,093

Net debt (excl. leases) 1,792

Minorities @ mkt value 1,127

Pension and Provisions 257

Equity value 23,916

Diluted average shares 199

Valuation per share 120

Source: J.P. Morgan estimates.

Risks to Rating and Price Target

Downside risks to our thesis: (1) Further strengthening of the CHF causing negative FX

translation impact. (2) Weaker-than-expected end markets, especially in Consumer, Health

& Nutrition. (3) Integration of the ATS acquisition disrupting US underlying organic growth

performance. (4) An inability to sustain the margin uplift from restructuring MT. (4)