UTDI: Lower Ionos Multiples Will Limit Upside Despite Raised Fair Value Estimate

Analysts have modestly raised their price target for United Internet to approximately EUR 21 from around EUR 14.46, citing a slightly higher discount rate, improved profit margin assumptions and somewhat richer future valuation multiples, partially offset by more conservative revenue growth expectations and lower peer multiples, particularly at Ionos.

Analyst Commentary

Recent Street research signals a more cautious stance on United Internet, with several bearish analysts recalibrating their assumptions for both the core business and key subsidiary Ionos. While the absolute price targets remain above current trading levels, the direction of revisions reflects growing skepticism about the company’s ability to deliver on earnings and valuation expectations.

Bearish analysts highlight that lower valuation multiples for Ionos are weighing on the group’s sum of the parts valuation. At the same time, shifting sector dynamics, including consolidation in European telecoms, are prompting a reassessment of how much upside United Internet can capture relative to peers over the medium term.

Upgrade actions have been tepid rather than enthusiastic, with moves from more negative ratings to neutral stances framed as an alignment with sector performance rather than a conviction call on accelerating growth or structural margin expansion at United Internet.

Bearish Takeaways

• Bearish analysts are cutting price targets from previously higher levels, primarily due to compressing valuation multiples at Ionos, which reduces the implied upside from the group’s digital infrastructure and hosting assets.
• The shift toward more neutral recommendations indicates concerns about execution risk, particularly around monetizing network investments and translating cost efficiencies into sustained margin improvement.
• Revisions emphasize downside risks to growth expectations, with a more conservative view on revenue momentum in a competitive German telecom market and slower-than-expected scaling of new digital services.
• Cautious sentiment also reflects relative valuation risk, as United Internet may struggle to re-rate meaningfully if peers benefit more directly from sector mergers and consolidation-driven synergies.

What's in the News

• United Internet AG confirmed its 2025 earnings guidance, targeting revenues of approximately EUR 6.05 billion for the year (company guidance).
• The company lowered its previous 2025 revenue outlook, now expecting consolidated sales from continued operations of around EUR 6.05 billion, compared with earlier guidance of about EUR 6.45 billion including Sedo (company guidance).

Valuation Changes

• The fair value estimate has risen meaningfully, moving from approximately €14.46 to €21.00 per share.
• The discount rate has increased moderately, from about 4.76 percent to roughly 5.63 percent, reflecting a higher perceived risk profile.
• Revenue growth assumptions have been reduced, with the projected rate falling from around 1.54 percent to approximately 1.15 percent.
• Net profit margin expectations have improved, rising from about 5.37 percent to roughly 6.16 percent.
• The future P/E multiple has expanded, increasing from around 7.87x to approximately 10.45x, implying a richer valuation framework for projected earnings.