Upgrade to EW. Mid-term growth still a risk, but relative valuation back near trough

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Upgrade to EW. Mid-term growth still a risk, but relative valuation back near trough

IdeaMExhibit 1: GEA one-year forward EV/EBIT vs Cap Goods Mechanicals peers.

GEA's relative valuation has de-rated by -19% in the last 12 months versus peers.

We see modest risk to consensus EBITDA, and our 2027 forecasts are -2% below.

However, we think this earnings risk is now reflected in the multiple, hence we

upgrade to Equal-weight (from UW)

1.1

1.0

0.9

0.8

0.7

0.6

GEA vs Mechanicals Average

Source: Refinitiv

Backdrop. We downgraded GEA Group to Underweight last December in our

2026 outlook report, Growth is still hard to come by. Before that, we had been

Overweight for most of 2025 (since our September 2024 upgrade, An under-

appreciated margin and cash return story). Going into 2026, we argued that it was

becoming more difficult for GEA to keep surprising on EBITDA margins, and we

thought that the mid-term organic revenue growth story (both cyclically and

structurally) was underwhelming.

What has changed our view, and why are we upgrading to Equal-weight now?

The primary reason is valuation. As we show in Exhibit 1 , GEA's relative valuation

versus Cap Goods mechanicals peers is close to relative lows, and the stock is now

screening as inexpensive. While we still doubt that GEA can sustainably grow

organic revenues at >5% over 2027-30, we think some of this is already reflected in

the price, with GEA's shares +3% year-to-date, versus the Industrials index (SXNP)

+10% in that time. From a top-down perspective, we think sentiment around the

stock potentially benefits if there is less pressure on consumers from a higher oil

price. GEA's revenues are 80% Food and Beverage exposed, the highest consumer

exposure among the names we cover. Then from a bottom-up perspective, we note