AMP: Shares Will Rebound As Margin Plan Overcomes Weak End Markets

Analysts have trimmed their price target on Amplifon to EUR 17 from EUR 17.86, reflecting slightly weaker assumptions for margin recovery and growth as they balance concerns over soft end markets with a still constructive view on the stock's longer term risk/reward profile.

Analyst Commentary

Recent Street research reflects a more nuanced stance on Amplifon, with mixed views on the balance between near term earnings pressure and medium term value creation. While some see attractive upside following the share price correction, others highlight persistent execution and market risks that could weigh on the pace of profit recovery.

Bullish Takeaways

• Bullish analysts argue that with the shares down over 40 percent year to date, current valuation already discounts a significant portion of cyclical and execution risk, creating a more favorable risk reward setup.
• They see scope for multiple expansion if Amplifon can demonstrate steady progress on its margin improvement plan and regain operating leverage as demand conditions stabilize.
• Longer term structural growth drivers in hearing care, including aging demographics and rising penetration, are viewed as intact, supporting confidence in mid cycle revenue growth beyond the current soft patch.
• Price targets in the high teens suggest potential upside from current levels if management delivers on cost efficiencies and capitalizes on its global scale to drive profitable growth.

Bearish Takeaways

• Bearish analysts highlight weak end markets as a meaningful risk to 2026 sales assumptions, warning that slower volume recovery could cap top line growth and delay operating margin normalization.
• Lowered price targets in the mid teens reflect reduced confidence in near term execution, with concerns that management may struggle to fully offset cost inflation and competitive pressures.
• Some see limited room for valuation re rating in the absence of clear evidence that Amplifon can accelerate same store sales and improve cash generation, especially after recent downward revisions to earnings forecasts.
• There is caution that further disappointments on growth or profitability could trigger additional estimate cuts, keeping the shares range bound despite the recent de rating.

Valuation Changes

• Fair Value: reduced slightly to €17.30 from €17.86, reflecting a modest downgrade to long term assumptions.
• Discount Rate: risen marginally to 9.13 percent from 9.02 percent, indicating a small increase in perceived risk or required return.
• Revenue Growth: edged down to 5.33 percent from 5.34 percent, signaling a very minor softening in expected top line momentum.
• Net Profit Margin: lowered slightly to 7.54 percent from 7.67 percent, pointing to a more cautious view on profitability recovery.
• Future P/E: eased to 21.6x from 21.9x, consistent with the moderate reduction in earnings growth expectations.