ABB (ABBN.S) Model Update

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ABB (ABBN.S) Model Update

ABB (ABBN.S)

01 July 2026 Citi Research

ABB

Valuation

We derive our TP of SFr85 using the average of our DCF and SOTP valuations. For the SOTP, we use EV/EBITA multiples for

divisions (in line with respective divisional peers), implying c20x multiple for the group. For the DCF we use a WACC of 6.6%, a

through-cycle margin of 21% and a terminal growth rate of 2.5%.

Risks

Downside risks that could prevent the shares from achieving our target price include:

Competition: Some of ABB’s businesses are becoming more competitive, including through the rise of emerging markets

competition. Increased capacity and unusual pricing behaviour by new competitors may present a risk to future earnings.

Acquisitions: While some of ABB’s recent acquisitions appear to have created value, others do not yet cover their cost of capital

on our estimates. Returns from future deals are hard to predict, and so estimating returns from cash deployment through future

M&A is a challenge.

Project execution: Some of ABB’s divisions, notably in Industrial Automation, include project-related businesses where ABB

incurs project risk. While the company is addressing past problems, some residual contract risk is likely to remain. There is

upside risk to growth and margins in Medium Voltage growth if the datacenter growth continues to accelerate better than

expected.

Upside risks: If the expected recovery in H1’26 and 2026 is more than anticipated, there could be upside potential to group

margins.

If the impact on the company from any of these factors proves to be greater than we anticipate, the stock will likely have

difficulty achieving our target price. Likewise, if any of these factors proves to have less of an effect than we anticipate, the stock

could outperform our target.