UBS upgrades EQT stock rating to Buy on private markets recovery

UBS has upgraded EQT AB from Sell to Buy, raising its price target to SEK360 from SEK230, citing the company's exposure to recovering private markets deal activity and anticipating EQT will beat consensus PRE expectations in its upcoming July 17 first-half results. The upgrade is supported by improving industry trends and EQT's sustained active deal-making in Q2, though UBS noted near-term headwinds from a weaker U.S. dollar and limited potential for fundraising surprises.

Analysis

UBS has issued a significant upgrade for EQT AB, moving its recommendation from Sell to Buy and increasing the price target by over 56% to SEK360.00 from SEK230.00. This revision is predicated on the firm's exposure to a recovery in private market deal activity and an anticipation that its upcoming first-half results on July 17 will serve as a positive catalyst. UBS projects EQT will surpass consensus proportionate revenue equivalent (PRE) expectations, citing improving industry trends and EQT's sustained deal-making throughout the volatile second quarter. However, this bullish outlook is tempered by specific near-term risks. UBS highlights that a weaker U.S. dollar will likely act as a headwind on second-quarter returns and also cautions against expecting significant positive surprises in fundraising in the immediate future.

Key Decisions for Investors

• Investors may consider the upcoming July 17 earnings report a key catalyst, as UBS anticipates an earnings beat driven by strong deal activity, potentially justifying a long position ahead of the release.
• It is crucial to monitor the impact of foreign exchange movements, specifically the weaker U.S. dollar, which is expected to negatively affect Q2 returns and could offset some of the operational strength.
• While the deal-making outlook is positive, investors should temper expectations for near-term fundraising growth, as UBS sees limited potential for upside surprises in this area.