Azelis Weak results are anticipated, limited downside risk

Since our last update, the market has experienced a wave of profit warnings and significant FX volatility. As a result, we find it necessary to revise our estimates. We are lowering our adjusted EBITA forecast from €471m to €451m, primarily due to adverse FX movements. Furthermore, we decrease our GPm expectations for the Americas. We anticipated that improvements in the F&F segment would support margin expansion in 2Q25, the combination of FX headwinds, macroeconomic uncertainty, and unfavourable weather conditions compels us to adopt a more cautious stance. We now provide a detailed breakdown indicating that GPm will be lower than previously expected. FY25 CSS EBITA expectations decreased with 11% since the 1Q25 results from € 509m to € 453m and peer premium is also at a record low. This suggest that both the estimate and the multiple have been largely derisked. Therefore, we reiterate our Buy rating, while the FX adjustment drive a decrease in Target price from € 24 to € 23 per share.