Why did JPMorgan upgrade Sika stock to Overweight?

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Investing.com -- JPMorgan upgraded Sika AG (BS:SIKAz) to Overweight from Neutral, raising its price target to CHF215 from CHF165, citing improved execution and an end to the downgrade cycle that affected the company in recent years.

The investment bank said Sika delivered a strong second quarter following a better-than-expected first quarter. JPMorgan noted that if the company meets the upper end of its top-line and margin guidance, EBITDA could reach approximately CHF2,240 million, about 4% above consensus estimates.

Sika has managed cost inflation through price increases and could benefit from favorable price-cost trends if deflationary conditions emerge, as the company will likely maintain some pricing power, JPMorgan said. The firm also highlighted that Sika’s second-quarter volumes increased over 4%.

The stock rose 10% following the quarterly results, though shares remain underperforming the lightside sector by approximately 30 percentage points since 2024. The stock has de-rated from around 20 times EV/EBITDA to approximately 14 times currently.

JPMorgan’s revised price target reflects slightly higher earnings estimates and an adjustment to its valuation multiple back to the long-run average of around 16 times, based on accelerating earnings momentum and returning credibility.

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