Jefferies has opened coverage of AlzChem Group AG (F:ACT1) with a buy recommendation and a target price of €190 per share, which equates to 23% upside from the most recent closing price of €154.80. The broker attributes its bullish stance to a set of capacity additions and potential U.S. investment that together create what it describes as a "multi-year acceleration phase" for the German specialty chemicals producer.
AlzChem, traded on the Frankfurt Stock Exchange and valued at about €1.6 billion, is executing two substantial projects that underpin Jefferies' forecasts. The company is investing €140 million to double nitroguanidine capacity at its Trostberg, Germany site, with commissioning planned for the second half of 2026. That expansion is part-funded by a non-refundable €34.4 million grant from the EU under the Act in Support of Ammunition Production program. By the third quarter of 2025 the company had collected roughly €55.5 million in customer prepayments toward that project.
Separately, in December 2025 AlzChem approved a €120 million automated creatine plant, with phased commissioning expected to begin in the second half of 2027. Jefferies anticipates these creatine volumes will contribute additional annual sales in the high double-digit millions from 2028 onward.
On top of the European projects, the U.S. Department of Defense has issued a conditional commitment of $150 million in non-refundable grant funding to fully finance a nitroguanidine facility in the United States. That commitment is contingent on AlzChem selecting a site by the end of 2026, with a completion target of 2029. Jefferies highlights the U.S. site selection as a material catalyst for the stock in 2026.
Financially, Jefferies models a 12.5% compound annual growth rate in revenue from 2025 to 2028, lifting sales to €804 million by 2028. EBITDA is projected to expand at an 18.7% compound annual rate to €193 million over the same period. Per-share earnings are estimated at €5.99 in 2025, rising to €9.69 in 2028 under Jefferies' base case.
The composition of AlzChem's sales and profits underpins much of the margin expansion in the bank's forecast. Specialty chemicals represented 66% of group revenue and about 90% of EBITDA in the first nine months of 2025, with an EBITDA margin of 27.7% within that segment compared with 4.2% in Basics & Intermediates. Jefferies projects the group's overall EBITDA margin will climb from 19.0% in 2024 to 24.0% by 2028, citing a shift toward regulated, application-specific products across defense, human nutrition, pharma and agriculture that has "decoupled profitability from pure volume growth in basic chemicals."
Valuation metrics in Jefferies' note place AlzChem at EV/EBIT multiples of 17.8x for 2026 and 15.6x for 2027. These multiples are slightly below specialty chemical peers at 18.6x and 16.5x, and more markedly below defense-sector peers at 25.9x and 20.8x, according to the bank's comparatives.
Jefferies' discounted cash flow model applies a weighted average cost of capital of 8.4%, a medium-term revenue growth assumption of 7% that incorporates projected U.S. plant revenue, and a terminal growth rate of 2.5%, resulting in an equity valuation of €190 per share. The bank notes that the current market price effectively implies only 2% medium-term growth, which it interprets as pricing in essentially no contribution from a U.S. facility by 2030.
On the balance sheet and cash flow front, Jefferies expects net debt to improve to a positive position of €18 million in 2027 before moving to net cash of €19 million in 2028 as the new capacities begin generating cash. Free cash flow is projected to be approximately breakeven during 2026-2027, followed by a recovery to €62 million in 2028.
The bank flags several risks that could undermine the thesis, including competition from Asian producers, volatility in European energy prices, disruptions in raw material procurement and regulatory changes. One specific regulatory risk highlighted is a potential EU restriction on Perlka, AlzChem's calcium cyanamide fertilizer, which could affect the Basics & Intermediates segment.
Investment case context
Jefferies' initiation combines production-capacity upgrades, secured and conditional external funding and a shift in product mix toward higher-margin specialty lines. The timetable for commissioning and the realization of grants and customer prepayments feature prominently in the bank's revenue and cash flow projections. The conditional U.S. Department of Defense commitment and the timing of a U.S. site announcement are singled out as key milestones that could materially influence the investment case in 2026 and beyond.
Bottom line
Jefferies assigns a buy rating to AlzChem with a €190 price target based on accelerated revenue and EBITDA growth driven by European and potential U.S. capacity additions in defense and nutrition-oriented products. The forecasted margin expansion and transition to specialty products form the basis of the valuation, while execution risks, energy and raw material dynamics, and regulatory developments remain potential headwinds.