Digitalization And Consulting Expansion In Europe Will Unlock Advisory Value

Key Takeaways

• Growth is driven by expanding advisory capacity, digital enhancements, geographic presence, and deepening client relationships across multiple services.
  
• Stable fee revenue, high client satisfaction, and strong capital position support resilience and sustainable profit as retirement planning needs rise.
  
• Ongoing fee pressure, shrinking interest income, rising costs, and expansion challenges threaten long-term profit margins and sustainable growth, especially amid increasing regulatory complexity.

Catalysts

Provides financial services in Switzerland, Germany, and England.

• Expansion of consulting capacity and continued strong demand for advisory services-especially driven by demographic changes and increasing retirement planning needs-position VZ Holding to sustainably grow client inflows, assets under management, and recurring fee revenues.
  
• Ongoing digitalization initiatives (financial portal upgrades, new digital assistant, improved client interface, integration of own portfolio management platform) are expected to improve operational efficiency, client retention, and enable greater platform usage per client, leading to higher revenue per client and enhanced net margins.
  
• Active geographic expansion in Germany and the UK, including new branch openings and integration of smaller advisors (IFAs), is likely to drive organic and inorganic growth, broaden VZ's client base, and support steady top-line and bottom-line expansion.
  
• Growing focus on cross-selling and increasing the share of clients using multiple platform services (targeting 33% using 3+ platforms) is poised to deepen client relationships and boost recurring fee income, directly supporting margin expansion over time.
  
• Stable fee-based revenue model, paired with very high client satisfaction (NPS >70) and robust capital ratios, fosters resilience to market volatility and positions VZ Holding for long-term net profit and dividend growth as secular trends continue to increase the need for holistic, professional wealth management solutions.

VZ Holding Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming VZ Holding's revenue will grow by 7.1% annually over the next 3 years.
• Analysts assume that profit margins will increase from 37.6% today to 41.3% in 3 years time.
• Analysts expect earnings to reach CHF 307.7 million (and earnings per share of CHF 7.44) by about August 2028, up from CHF 227.4 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 27.4x on those 2028 earnings, down from 30.3x today. This future PE is greater than the current PE for the GB Capital Markets industry at 20.1x.
• Analysts expect the number of shares outstanding to grow by 0.06% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 5.2%, as per the Simply Wall St company report.

VZ Holding Future Earnings Per Share Growth

Risks

• The persistent and accelerating shift toward low-cost, passive investment products and all-in fee models is causing ongoing fee compression, reflected by VZ Holding's own expectation that transaction fees from older portfolios are set to decline steadily over the next 15 years; this will exert downward pressure on margins and revenue sustainability over the long term.
  
• The continued decrease in net interest income, driven by Swiss National Bank rate cuts and a shrinking interest margin (from a peak in 2023 to 0.6% in 2025, with further declines expected into 2026), will structurally weaken a material source of earnings even as management downplays its relative contribution; this reduces both net profit and profit margin resilience.
  
• Operating expense growth, especially in IT and general administration (which rose 18.6% year-over-year), could exceed revenue growth if competitive pressures or digitization costs remain elevated; this threatens to erode operational leverage and compress net margins if client growth or fee income slows.
  
• Difficulty scaling and replicating the Swiss business model across Germany and the UK-with Germany lacking opportunities for pension product cross-selling and only modest international profits so far-may limit international expansion potential, causing long-term revenue growth to fall short of expectations.
  
• Rising regulatory complexity and compliance costs, particularly as VZ integrates more digital solutions and expands abroad, could outpace efficiency gains from platform investments; this threatens higher fixed costs and reduced net margins, especially in an environment of increasing regulatory scrutiny across Europe.

Valuation

• The analysts have a consensus price target of CHF185.5 for VZ Holding based on their expectations of its future earnings growth, profit margins and other risk factors.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be CHF744.3 million, earnings will come to CHF307.7 million, and it would be trading on a PE ratio of 27.4x, assuming you use a discount rate of 5.2%.
• Given the current share price of CHF174.8, the analyst price target of CHF185.5 is 5.8% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.