Attractive Photonics, But Valuation Disconnect Widens. Downgrade to Sell.

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Attractive Photonics, But Valuation Disconnect Widens. Downgrade to Sell.

Assuming ~36% Photonics growth, we expect the rest (~84% of FY26 revenue) to grow 03/29E 2.66 5.34 101 4.51

at a more modest ~14% CAGR over FY26–30E, reflecting RF SOI maturity (c.25–35% of

sales), partly offset by POI. While RF SOI should recover by late FY27, structural Francois-Xavier Bouvignies

headwinds (shrink, GlobalWafers licence expiry) limit upside. Overall, we forecast ~18% Analyst

francois.bouvignies@ubs.comrevenue CAGR, with margin expansion lagging due to gradual utilisation recovery, high

+44-20-7568 7105

inventories, and potential post-2030 capacity needs.

Harry Blaiklock, CFA

3) A stretched relative valuation Analyst

harry.blaiklock@ubs.com

Compared with its main peers (ie silicon wafers), Soitec is currently trading at a ~65% +44-20-7568 5385

premium on 2027E EV/Sales. When assessed against its expected revenue CAGR over

2026–28, the stock also screens as c.20% above trendline. Furthermore, UBS HOLT

analysis suggests the current valuation already discounts a significant improvement in

fundamentals, including EBITDA margins reaching cyclical highs of ~34% by 2029,

alongside sales growth of c.27% p.a. in 2028–29 (vs. UBS estimates of 21–23%).

DCF-based price target €85 from €26/share

We significantly raise our price target to reflect our revised earnings profile, primarily

driven by the accelerating Photonics-SOI opportunity over the medium to long term.

However, we lower our FY27-28E EPS estimates, reflecting materially weaker gross

margins as ongoing destocking at Soitec results in elevated idle costs.

Highlights (€m) 03/24 03/25 03/26 03/27E 03/28E 03/29E 03/30E 03/31E

Revenues 978 891 592 683 841 1,016 1,167 1,346

EBIT (UBS) 208 136 (8) 8 94 231 265 307