Shares of EQT AB (ST:) fell on Wednesday after UBS downgraded the company’s shares from ‘neutral’ to ‘sell’, citing valuation risks and concerns about near-term earnings.
At 4:29 a.m. (0829 GMT), EQT AB was trading 2% lower at SEK 352.20.
“According to our forecasts, EQT is the most expensive of the European asset managers, trading at 25.7x 2025E, well above the European peer group, and with only a handful of names in the US trading higher,” analysts said.
The downgrade was due to concerns that EQT’s premium valuation was under pressure due to weaker earnings guidance, lower expected carried interest and slower private equity exit activity.
UBS cut its price target by 7.7% from SEK 325 to SEK 300, driven by lower forecasts for future fund size growth and carried interest.
The broker also pointed out that 36% of EQT’s private equity portfolio, worth over €20 billion, is exposed to risks due to its high concentration in the technology, services and healthcare sectors, sectors currently vulnerable to lower ratings.
UBS also noted a potential profit drop of 12% to 13% if the closure of key funds such as EQT XI and BPEA IX is postponed.
Additionally, exit activity in the private equity market remains subdued, which could force EQT to sell assets below their book value, further dampening fund returns and future fundraising efforts.
