Goldman Sachs downgrades Carl Zeiss Meditec to Sell on valuation concerns

Goldman Sachs has downgraded Carl Zeiss Meditec from Neutral to Sell, slashing its price target from €27.00 to €23.00. The new target implies a 26% downside, contrasting with the firm's 22% average upside estimate for European Medtech stocks. Analysts argue that Zeiss's valuation is disconnected from fundamentals, trading above its 10-year relative range and beyond sector norms for organic growth and P/E multiples.

The downgrade follows Zeiss Group's June announcement to invest up to €200 million in Carl Zeiss Meditec. Goldman Sachs expects buying support to fade, closing the gap between valuation and fundamentals. Despite a -21% YTD underperformance, the firm believes earnings have not bottomed out, and deteriorating top-line outlook has not been fully priced in.

Zeiss faces challenges from IOL VBP 2.0 and slower capital equipment placements, impacting procedure volumes and utilization. The firm has cut adjusted EBITDA estimates to +2%, -11%, and -6% for FY26, FY27, and FY28, respectively. Organic sales growth is expected to improve to 1.2% in FY27 from an estimated -1.0% in FY26, but FY26 results on 10 Dec may prompt lower consensus estimates.

Goldman Sachs also notes increasing local competition and cautious optimism about Zeiss’s Profit Up restructuring program, which signals proactive cost management. However, the firm believes consensus cost savings are premature and underestimate weaker revenue trends. The target multiple has been lowered to 13x from 14x, reflecting reduced organic growth forecasts of 3.2% for FY27-29, down from 4.5% previously.