Nemetschek lifted to “buy” at Berenberg with €125 target on growth outlook

Berenberg upgraded German software group Nemetschek AG (ETR:NEKG) to "buy" from "hold," raising its price target to €125 from €117, following a significant stock pullback that has made its valuation more reasonable relative to the DAX. The brokerage expressed renewed confidence in Nemetschek's mid-term growth potential, driven by Bluebeam software adoption and European expansion, and lifted its sales growth forecasts. Berenberg projects robust financial performance, including a 14% sales CAGR and 22.6% EPS CAGR between 2025-2027, with EBITDA margins expanding to 32.5% by 2027, implying approximately 15% upside from the stock's recent closing price of €108.30.

Analysis

Berenberg has upgraded Nemetschek AG (ETR:NEKG) to “buy” from “hold,” increasing its price target to €125, which implies approximately 15% upside from the recent €108.30 closing price. The upgrade is primarily catalyzed by a valuation de-risking following a greater than 20% pullback in the stock since its August peak, which has brought its forward price-to-earnings premium relative to the DAX to one of its lowest points since 2018. Confidence in the company's mid-term growth potential has been reinforced by recent management discussions, highlighting key drivers such as the adoption momentum of its Bluebeam software, expansion opportunities in the European build business, and upselling of GoCanvas. Consequently, Berenberg has raised its 2026-2027 sales growth forecasts. The firm projects a compound annual growth rate of 14% for sales and 22.6% for EPS between 2025 and 2027, supported by expanding margins, with the EBITDA margin forecast to reach 32.5% by 2027. Furthermore, free cash flow is expected to grow robustly to €410 million by 2027, and Berenberg notes that investor awareness of near-term headwinds reduces the risk of an expectation gap.

Key Decisions for Investors

• Given the stock's recent pullback and the upgraded 'buy' rating, the current valuation may represent a compelling entry point for investors seeking exposure to a market leader in AEC software with a clearly articulated growth path.
• Investors should monitor the adoption rate of the Bluebeam software and progress on European expansion, as these are the primary catalysts cited by Berenberg to justify the firm's upgraded sales and earnings forecasts.
• While the outlook is positive, positions should be sized with an awareness that the valuation is predicated on achieving high growth, specifically the projected 14% sales and 22.6% EPS CAGR through 2027, making the stock sensitive to any execution shortfalls.