Jefferies upgrades Inficon to ‘buy,’ sees 20% upside

Investing.com — Jefferies in a note dated Monday upgraded Inficon Holding AG (SIX:) to a “buy” rating from “hold,” signaling a shift in outlook for the Swiss-based manufacturer of advanced gas analysis, measurement, and control instruments. 

Analysts at Jefferies noted that Inficon’s stock has declined by over 30% from its 2024 highs, largely due to diminished expectations around semiconductor-related capital expenditures and a general downturn in orders. 

However, this sharp decline now presents what Jefferies describes as “an attractive entry point into a high-quality compounder.” 

The analysts pointed out that the stock’s current valuation, at approximately 25 times its projected 2025 earnings, represents a 25% discount to its five-year average, highlighting potential upside.

One of the key factors driving Jefferies’ upgrade is the expectation of a more balanced demand profile by 2025. 

While 2024 saw mixed performance across Inficon’s segments—marked declines in its General Vacuum business and flat performance in Refrigeration, Air Conditioning, and Automotive—growth was observed in Security & Energy and modest gains in Semiconductors and Vacuum Coating.

Inficon is expected to be able to achieve a more even growth trajectory with improved conditions in the automotive and battery sectors, as well as a broader industrial recovery, according to Jefferies. 

Further, advancements in process technologies, such as autonomous control rooms for smart factories, are expected to boost demand for Inficon’s products.

The analysts also flag the resilience of Inficon’s diversified end-market exposure, with less than 50% of its revenue tied to the semiconductors sector, a factor that differentiates it from its peers. 

This broader customer base provides higher earnings visibility through economic cycles, an aspect Jefferies believes is underappreciated by the market.

Jefferies has also revised its medium-term earnings forecasts, now anticipating double-digit growth in Inficon’s earnings per share for both 2025 and 2026. 

This outlook is supported by expected recovery in General Vacuum and continued expansion in the Security & Energy segment, aided by strong demand for the company’s next-generation HAPSITE chemical detection systems, which have seen interest from NATO and other defense customers.

Based on a discounted cash flow analysis, Jefferies has set a new price target for Inficon at CHF 1,350, implying a 20% upside from its current level.