UBS has moved Ionos SE's recommendation down one notch to "neutral" from "buy" and cut its price objective to €28 from €40, citing ongoing concerns about competition from artificial intelligence-driven website tools and softer revenue trajectories in the near term.
Shares fell sharply on the news, trading 8.6% lower at 06:36 ET (11:36 GMT). The stock has already fallen roughly 40% from its August high as investor worries have intensified that AI-based website builders could erode demand for Ionos' core Web Presence and Productivity business.
IONOS, which primarily serves small and medium-sized businesses across Europe and North America, has issued two revenue downgrades in recent quarters, according to the UBS note. The brokerage said those revisions and underlying trends are likely to keep investors cautious.
"Near-term quarterly trends are unlikely to reassure as growth decelerates into Q4-25 with a pickup only likely from Q2-26," the analysts wrote, expressing skepticism that short-term results will allay market concerns.
UBS now forecasts Web Presence and Productivity revenue growth slowing to 4.2% in Q4-25 from 7.4% in Q2-25. The brokerage attributed part of that slowdown to difficult year-over-year comparisons, noting that the company is lapping double-digit price increases implemented in the prior year.
Analysts also pointed out that higher customer additions expected in 2025 compared with 2024 may put downward pressure on average revenue per user. UBS estimates ARPU could be squeezed by as much as 2% per quarter if new customers sign up at substantially lower price points.
Cloud segment growth is projected to decelerate as well, with UBS forecasting a slowdown to 1.7% in Q4-25 from 6.3% in Q3-25. The brokerage noted that this reflects lower year-over-year revenues tied to the ITZBund government contract.
On the earnings front, UBS trimmed its 2026 earnings-per-share estimate modestly, reducing it by 2% to €1.83 from a prior €1.87. The firm said longer-term earnings assumptions faced deeper reductions of more than 10% because weaker annual growth compounds over time.
UBS also lowered its long-term revenue growth assumptions, now projecting 3% for Web Presence and Productivity (down from 4%) and 10% for Cloud (down from 12.5%).
Competitive dynamics add to the uncertainty. UBS noted that peers GoDaddy and WIX have seen their price-to-earnings multiples halve over the past year amid similar AI disruption concerns. IONOS currently trades at 13.9 times 2026 estimated earnings, which the analysts described as a modest premium to GoDaddy and WIX at 12.5 times, but a discount to European internet peers at 15.5 times.
"Investor sentiment on the stock is increasingly polarised," UBS said, highlighting an ongoing market debate over whether IONOS' rollout of AI-enabled products will leave it positioned as an AI beneficiary or whether third-party AI-centric web builders pose an existential threat to parts of its business.
On the balance-sheet side, UBS expects the company's leverage ratio to fall below 1 times by the end of 2026, which could open the door to shareholder returns such as dividends or share buybacks. Nonetheless, the analysts emphasized that a sustainable recovery in the share price will hinge on demonstrable acceleration in revenue growth.
Context and outlook
UBS' downgrade encapsulates several linked concerns the brokerage sees for IONOS: intensifying AI competition in website-building, near-term deceleration in both Web Presence and Cloud revenue growth, and pressure on average revenue per user from lower-priced new customers. While the firm sees potential for improved leverage metrics and eventual shareholder distributions, it stresses that clearer evidence of revenue momentum will be required for a meaningful re-rating.