Shares of Huber + Suhner AG dropped just over 4% on Tuesday following a change in stance from Berenberg, which moved the Swiss connectivity equipment maker's recommendation to "hold" from "buy." The bank said the stock’s more than threefold increase over the past 12 months has significantly reduced the potential for further upside.
Berenberg, while downgrading the rating, raised its price target to CHF250 from CHF200. The stock closed at CHF259.50 on June 15 on the SIX Swiss Exchange, valuing Huber + Suhner at CHF4.79 billion. The company’s 52-week trading range runs from a low of CHF85.40 to a high of CHF287.
The brokerage described its stance as balanced: it continues to view the investment case favourably because of the firm’s developing optical circuit switch (OCS) offering and sustained mid-term demand from aerospace and defence customers, but said the recent, steep appreciation of the share price constrains potential capital gains.
Forecasts and assumptions
Berenberg projects that Huber + Suhner’s OCS business could approach CHF400 million in revenue by 2028, which the bank expects to represent roughly 27% of group sales and about 40% of group EBIT. Those figures are built on the brokerage’s forecast for the company’s initial hyperscaler order, which Berenberg assumes involves replacement of a spine-leaf network topology and will be supplemented by sales to new customers beginning in 2028.
The bank estimated the total potential contract value of Huber + Suhner’s multi-year cooperation agreement with the unnamed hyperscaler at about CHF650 million across three years. Within that framework, Berenberg laid out expected Polatis sales tied to the contract of CHF79 million in 2026, CHF211 million in 2027 and CHF362 million in 2028.
For profitability, Berenberg assumed the OCS unit will achieve a 25% EBIT margin, a level positioned between Huber + Suhner’s current group EBIT margin and the 40% mid-term margin guided by peer Lumentum Holdings.
Production and operational moves
On manufacturing, the brokerage noted that the first third-generation assembly line has arrived at Huber + Suhner’s Pisary, Poland facility, with management anticipating a second line in August to support delivery of the initial hyperscaler order. The company has also shifted production for other customers to the UK, moved sub-assembly work to external suppliers, and subcontracted certain tasks to a sister facility in Poland.
Berenberg’s valuation metrics show the shares trading at 27 times forecast 2027 EV/EBIT, which it described as a 25% discount to Lumentum, the closest peer in the OCS market in its view.
Model revisions and guidance
The brokerage raised its 2027 sales estimate by 3.1% to CHF1.20 billion and lifted its 2027 EBIT forecast by 9.8% to CHF169 million. It also increased its 2027 earnings per share projection by 14.2% to CHF7.60.
Risks highlighted
Berenberg flagged several potential headwinds for the company’s outlook, including the possibility of cuts or delays to defence budgets, supply chain disruptions that could affect raw materials and input costs, and competition from larger U.S. rivals with substantially bigger research and development budgets.
Business profile
Huber + Suhner produces a range of electrical and optical connectivity products, among them cables, connectors, antennas, adaptors and transceivers. The market reaction to the broker note underscores investor sensitivity to valuation after a rapid move higher in the share price, even as analysts incorporate stronger revenue and earnings assumptions tied to the firm’s OCS opportunity.