UBS has opened coverage on Cicor Technologies Ltd (SIX:CICN) with a "buy" recommendation and a CHF173 price target, singling out the Swiss electronic manufacturing services provider as a key beneficiary of an expanding defense spending cycle in Europe. The research note has already been followed by a market reaction, with the stock rising more than 5% on Wednesday.
Defense exposure and revenue mix
The brokerage identifies Cicor as the Swiss small- and mid-cap industrial company with the greatest exposure to the European defense sector. UBS's estimates indicate that defense-related sales will represent roughly 30% of Cicor's revenue in 2025. That positioning is central to the firm's thesis, given its forecast of strong budgetary increases across European defense procurement.
Top-line trajectory and timing
UBS projects that accelerated defense spending - modelled as about a 16% compound annual growth rate in European defense equipment budgets from 2023 to 2030 - will underpin Cicor's organic sales expansion beginning in 2026. The analysts lay out a pathway for renewed revenue growth following a disruptive profit warning in December 2025, an event that weighed on investor sentiment and coincided with a roughly 30% decline in the share price.
In UBS's view, Cicor will achieve positive organic sales growth in 2026, with an estimated 4.3% increase as defense demand strengthens and the firm's industrial and medical segments stabilize. The brokerage expects a further pick-up to around 7% annual organic growth in both 2027 and 2028, aligning with Cicor's mid-term target range of 7% to 10%.
Drivers within the medical and industrial divisions
The research note highlights several internal demand drivers. In the medical segment, UBS anticipates restocking by healthcare customers and ongoing orders from hearing-aid manufacturers to support recovery. On the industrial side, Germany's gradual recovery and improvements in the semiconductor-equipment market are cited as supportive trends that should help broad-based revenue normalization.
Profitability outlook and margin levers
Profitability improvements form a critical pillar of UBS's investment case. The brokerage forecasts a 200 basis-point increase in Cicor's adjusted EBITDA margin, from about 10.7% in 2025 to 12.7% in 2028. Two primary sources of margin expansion are noted: a turnaround at Eolane, the French business acquired by Cicor with margins substantially below the group average, and operating leverage resulting from higher volumes.
UBS also points to a rising share of aerospace and defense sales - a segment the analysts describe as margin-accretive - as an additional contributor to overall profitability gains.
Balance sheet, M&A optionality and scenario analysis
The company's balance sheet features prominently in UBS's view. Cicor is projected to carry net debt of about 1.1x EBITDA in 2025, a leverage profile the analysts interpret as providing headroom for prospective acquisitions. UBS ran scenario analyses showing that, at an 8x EBITDA acquisition multiple and within a leverage range of 1.5x to 2.5x, additional deals could boost 2026 earnings per share by 8% to 20%.
Although the brokerage does not include further acquisitions in its base-case financial model, it notes that M&A remains an important strategic channel for acquiring customers in markets characterized by sticky supply chains.
Valuation and base-case assumptions
UBS sees the current share price as an attractive entry point in part because Cicor trades at roughly 15x 2026 earnings - about 20% below the Swiss industrial peer average cited by the analysts. The firm's base-case forecast assumes an 11% revenue compound annual growth rate and a 17% EBITDA CAGR between 2025 and 2028, supporting an expected 28% EPS CAGR over the same period.
In constructing its discounted-cash-flow valuation, UBS applies a long-term growth rate of 2%, an 11% EBITDA margin for terminal assumptions, and a weighted average cost of capital of 8.5%.
Implications
For investors focused on companies exposed to defense procurement spending, Cicor emerges in UBS's analysis as an industrial-electronics name with a relatively concentrated exposure to a sector forecast to expand rapidly. The firm's forecasted margin recovery and manageable leverage profile underpin the broker's buy stance and CHF173 target.
Data and estimates cited in this report
- Defense share of Cicor sales in 2025: roughly 30%
- UBS estimate for European defense equipment budgets CAGR 2023-2030: about 16%
- UBS organic sales growth estimate for Cicor: +4.3% in 2026; ~7% in 2027-2028
- Adjusted EBITDA margin path projected by UBS: ~10.7% in 2025 to 12.7% in 2028 (200 basis-point improvement)
- Net debt projected for 2025: 1.1x EBITDA
- Valuation: ~15x 2026 earnings, ~20% below Swiss industrial peers