ABB (ABBN.S): Increasing our forecasts on Electrification strength, but valuation remains in focus

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ABB (ABBN.S): Increasing our forecasts on Electrification strength, but valuation remains in focus

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17 Jul 2026 00:43:20 ET │ 14 pages

ABB (ABBN.S)

Increasing our forecasts on Electrification strength, but valuation

remains in focus

CITI'S TAKE

The beat in Electrification orders supports the increase to our 2026/2027 Neutral

forecasts, with 2028 benefiting from Rotork deal accretion. Today’s share

price decline has been the focus of investor conversations; while the EL Price (16 Jul 26 17:30) SFr78.26

order beat is a clear positive, the valuation (rather than strategic rationale) Target price SFr85.00

of the Rotork deal has been a question. While we think the deal at least Expected share price return 8.6%meets the test of EPS accretion as compared to a buyback, this comparison

is in part helped by ABB’s relatively high valuation multiple; we see the Expected dividend yield 1.4%

acquisition ROCE below WACC in year 3, although expect this to improve Expected total return 10.0%

over time. We see ABB on EV/EBITA of 22.4x for 2026 pro-forma for the Market Cap SFr142,680MRotork deal including synergies, compared to Schneider on 19.5x pro-forma

for its own recent deal. We continue to see more attractive valuation relative US$177,606M

to growth at Schneider (Buy), and retain our Neutral on ABB.

Increasing forecasts in Electrification — Management confirmed on the call that

order strength was broad-based, with no pull-forward and no extended lead times. Price Performance

Hyperscaler customers, the dominant customer base in datacenters, do not order (RIC: ABBN.S, BB: ABBN SW)

for stock and so order strength reflects end-market demand. While the

Electrification order backlog of ~US$14bn sits at ~70% of annual divisional revenue,