J.P. Morgan upgraded Nemetschek on Monday, moving the German software developer from an "underweight" rating to "overweight" and lifting its price target for December 2027 to €110 from €90. The brokerage cited higher earnings projections and a reassessment of downside risk after a pronounced fall in the stock.
The firm highlighted that Nemetschek’s shares have underperformed peers, slipping roughly 45% from mid-2025 highs and falling about 16% year to date, versus a 7% decline for comparable companies. J.P. Morgan attributed much of the move lower to valuation de-rating rather than to cuts in underlying earnings forecasts.
Reflecting its revised view, the bank increased its adjusted profit and EBITDA forecasts. Its 2026 adjusted earnings-per-share estimate was raised to €2.68 from €2.56, while adjusted EBITDA for 2026 was lifted to €438 million from €424 million. The analysts also upgraded their operating profit assumptions and applied a higher target multiple, changes that supported the higher December 2027 price target.
Using the closing share price of €75.15 on Jan. 21 as the reference point, the new €110 target equates to prospective upside in excess of 40% by December 2027, according to J.P. Morgan. The bank has added the company to its Analyst Focus List, identifying it as one of its preferred names within European software.
J.P. Morgan flagged investor anxiety about artificial intelligence and the dynamics of multi-year software contracts as key contributors to the steep market re-rating. The analysts noted that Nemetschek’s stock now trades at roughly 30 times forward earnings, down from about 55 times in mid-2025, a sharper contraction than seen across industrial software peers and the broader European software sector.
Despite the share-price retreat, J.P. Morgan said Nemetschek’s earnings outlook has remained comparatively resilient. Consensus EBITDA estimates for 2026 have been broadly steady while the share price continued to slide, creating what the bank described as one of the largest recent disconnects between valuation and earnings in the company’s history.
The brokerage provided more detail on divisional forecasts. Total revenue for 2026 is now modeled at €1.35 billion, up from a prior figure of €1.33 billion. Adjusted EBITDA for the year is projected at €438 million, compared with €424 million previously. For 2027, J.P. Morgan raised its adjusted diluted earnings-per-share forecast to €3.20 from €2.91.
J.P. Morgan also reported the results of its valuation work. A reverse discounted cash flow analysis, using an 11% weighted average cost of capital and a 3% terminal growth rate, implies that current share prices are discounting mid-term free cash flow growth of about 15%. The bank said that this implied growth rate sits below both Nemetschek’s historical performance and J.P. Morgan’s own forecasts.
As a result of the de-rating, Nemetschek now trades below its long-term average premium to peers, according to the bank, and the balance of risk is described as tilting more positively. J.P. Morgan added that for further downside to materialize over a two-year horizon, the stock would need to undergo a substantial additional de-rating to levels beneath recent historical lows.
Takeaway: J.P. Morgan’s move combines higher earnings expectations and a valuation-driven rationale for recommending an overweight stance, with the firm seeing meaningful upside from current levels if earnings and cash generation hold to forecasts.