Arcadis Risk/Reward Not Yet Compelling in a Derating Sector

Arcadis surprised the market last week with weak FY results and disappointing 2026 guidance. We have overhauled our model and revisited our investment case. The repositioning of GBA Places announced after the IBI & DPS acquisitions in 2022 is not (yet) delivering the intended benefits, while the strategic shift toward large, higher margin projects is coinciding with slower and less predictable backlog conversion. With organic growth absent, the previously compelling deep discount valuation versus North American peers no longer holds. In addition, erratic US regulatory and trade policies weighing on capex decisions — combined with AI related uncertainty — have triggered a sector derating that could continue in the months ahead. Weak sentiment and near term operational headwinds make the current risk/reward not compelling enough to change our Hold rating despite the historically low valuation. TP €35 (from €51).