Stock Markets June 5, 2026 05:44 AM

UBS Starts Coverage on Munters, Sees Strong Data-Centre-Led Growth; 12-Month Target SKr245

Analysts project doubling of earnings through 2028 driven by direct liquid cooling and data centre technologies

By Nina Shah

UBS has initiated coverage of Sweden's Munters Group AB with a buy rating and a 12-month price target of SKr245. The broker expects earnings to roughly double from 2026 to 2028, driven by the Data Centre Technologies (DCT) division, and models above-consensus organic sales growth and margin expansion. Key assumptions include a high book-to-bill and a sizable DCT backlog; main risks cited are slower AI infrastructure spending, production expansion delays, and competitive pressure in liquid cooling.

UBS Starts Coverage on Munters, Sees Strong Data-Centre-Led Growth; 12-Month Target SKr245

Key Points

  • UBS initiated coverage on Munters with a buy rating and SKr245 12-month target, citing DCT-led growth.
  • Broker forecasts 18% organic CAGR in sales and 400 basis points of adjusted EBITA margin expansion for 2026-2028, above consensus.
  • DCT expected to see 40%/33%/13% organic revenue growth in 2026-2028, supported by a 2.35x book-to-bill in 2025 and a backlog equal to 2.3x 2025 DCT revenue.

UBS has opened coverage on Swedish climate control specialist Munters Group AB, assigning a "buy" rating and a 12-month target price of SKr245. The brokerage's projections hinge on a rapid ramp in the company’s Data Centre Technologies (DCT) business, which UBS says accounts for roughly 40% of group sales and about 60% of group adjusted EBIT.

In its modelling, UBS anticipates that Munters' earnings will approximately double between 2026 and 2028, driven by outsized contributions from the DCT unit. The broker's forecast calls for 18% organic compound annual growth in sales over that period and a 400 basis-point increase in adjusted EBITA margin - both metrics sit above consensus expectations of 16% sales growth and 360 basis points of margin expansion.

UBS highlighted that market pricing already reflects some degree of margin recovery and strong DCT momentum. Using a reverse discounted cash flow check, the analysts estimate that the market implies a mid-cycle adjusted EBITA margin near 14.5%, compared with UBS’ mid-cycle margin estimate of 17% and Munters’ own stated target of 14%.

The broker’s DCT revenue outlook is front-loaded, with projected organic growth of 40% in 2026, 33% in 2027 and 13% in 2028. UBS bases this trajectory on a high book-to-bill of 2.35x in fiscal 2025 and a backlog that is equivalent to 2.3 times projected 2025 annual DCT revenue of SKr5.91 billion.

UBS also estimated a 51% compound annual growth rate for the direct liquid cooling market between 2025 and 2030, a structural input to its bullish view on the DCT segment.

At the consolidated level, UBS projects group revenues of SKr17.45 billion in 2026, SKr21.05 billion in 2027 and SKr23.12 billion in 2028. Adjusted EBITA margins are forecast to reach 14.0% in 2026, 15.8% in 2027 and 16.7% in 2028, slightly ahead of consensus margins of 13.5%, 15.7% and 16.3% for the same years.

On a per-share basis, UBS expects adjusted earnings of SKr6.59 in 2026, SKr10.56 in 2027 and SKr12.74 in 2028. Those figures compare to consensus estimates of SKr6.51, SKr10.18 and SKr11.78, implying upside versus consensus of 1.2%, 3.7% and 8.1% across the respective years.

UBS values Munters using a three-stage discounted cash flow framework. Assumptions cited include an 8% weighted average cost of capital, a 6% mid-cycle growth rate, a 17% mid-cycle adjusted EBITA margin and a free cash flow conversion ratio of 78%.

The note indicates Munters shares trade at 17.8 times one-year forward EV/EBIT, which UBS characterises as an 8% discount to peers and below historical parity.

UBS also provided commentary on Munters’ AirTech division, which represents about 50% of group sales. The brokerage forecasts 13% organic order growth for AirTech in 2026, supported by its proprietary capex revision signal model that points to a modest pickup in capital expenditure across commercial and food & beverage end markets.

The analysts flagged a set of execution and market risks. Among the principal concerns are a potential slowdown in AI infrastructure spending, delays in the company’s planned production expansion in Virginia - which would increase the firm’s footprint by roughly 40% - challenges in realising cost savings and elevated competition within the liquid cooling market.


Context and implications

UBS’s initiation frames Munters as a company whose near-term outlook is closely tied to the trajectory of data-centre spending and the adoption of direct liquid cooling solutions. The DCT backlog and book-to-bill figures underpin the broker’s optimistic short-term growth assumptions, while the valuation exercise suggests room for upside if the firm meets or exceeds its implied margin targets.

Bottom line - UBS rates Munters a buy with a SKr245 12-month target, forecasting above-consensus sales growth and margin expansion driven by the DCT division, while cautioning on AI spending risk, execution of capacity expansion, and competitive pressure in liquid cooling.

Risks

  • Slower AI infrastructure spending could reduce demand for data-centre cooling solutions, impacting the data centres and technology infrastructure sectors.
  • Delays at Munters’ Virginia production expansion, which would add roughly 40% to footprint, could hinder capacity and delivery timelines, affecting manufacturing and supply chain operations.
  • Execution risk on cost savings and heightened competition in liquid cooling could pressure margins, influencing industrial and specialist cooling markets.

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