Deutsche Bank has shifted its recommendation on Ams Osram to "hold" from "buy," pointing to a softer near-term outlook and a more balanced risk-reward profile. The broker left its price target at CHF9.50. The stock had last closed at CHF8.66 and fell more than 4% on Wednesday following the announcement.
The downgrade followed Ams Osram's FY-25 results and came after the company issued a first-quarter outlook that Deutsche Bank said was roughly 15% below consensus. The brokerage flagged that the guidance also implies a weaker 2026 even when the planned disposal of the company's non-optical sensor business to Infineon - a transaction expected to bring in €570 million - is taken into account.
Analysts at Deutsche Bank highlighted several operational pressures compressing profitability. One material headwind cited was rising gold prices. The bank estimates that, assuming gold trades at $5,000 per ounce, the increase will subtract about €60 million year-over-year from cost of goods sold in 2026. In parallel, an auto market slowdown in China has intensified pricing pressure on Ams Osram's core LED business, according to the brokerage.
Deutsche Bank said the combined impact of higher input costs, the effects of disposals and prevailing foreign-exchange trends reduces the firm's earnings outlook. As a result, the broker now expects adjusted EBITDA of €466 million in 2026, down from its prior estimate of €532 million.
While Ams Osram previously ran an annualized adjusted EBITDA level near €600 million between 2023 and 2025, Deutsche Bank sees a return to that run rate as unlikely before 2028. The bank attributes the later timing to the delay required for savings from the company's newly launched "Simplify" cost-reduction program to materialize.
Deutsche Bank also acknowledged a notable cash inflow tied to a change in Ams Osram's employee pension fund structure, which has supported deleveraging. However, the brokerage said this one-off benefit does not outweigh the wider operational pressures the company faces. "We believe risks and rewards are now more in balance," analyst Robert Sanders said.
This change in stance reflects a mix of margin and volume pressures - from commodity-driven input cost increases to market-driven pricing stress in LED end markets - combined with the timing uncertainty around cost savings and the accounting and financial impacts of disposals and currency movements.
Key points
- Deutsche Bank downgraded Ams Osram to "hold" from "buy" and maintained a CHF9.50 price target; the stock closed at CHF8.66 and fell over 4%.
- Weaker Q1 guidance is cited as about 15% below consensus; the company's FY-26 outlook is seen as softer even after a planned €570m sale of its non-optical sensor business to Infineon.
- Rising gold costs and a China auto market slowdown are pressuring margins and pricing in the core LED business, prompting a cut to 2026 adjusted EBITDA to €466m from €532m.
Risks and uncertainties
- Commodity price risk - a sustained increase in gold could further erode gross margins and affect electronics and materials suppliers.
- End-market weakness - a slowdown in the China auto market could prolong pricing pressure in the LED segment and weigh on revenue and margin recovery.
- Execution and timing risk - realization of savings from the "Simplify" cost-reduction program is uncertain and appears necessary for a return to prior EBITDA run rates.