Ontex FIRST LOOK: Soft 1Q, guidance kept but subject to easing of energy crisis

1Q adj. EBITDA dropped by 24% and was 1% below our expectations and 4% below CSS. Ontex reiterated FY26 guidance of c. 10% adj. EBITDA growth but commented guidance is subject to a gradual easing of the energy crisis. The previous raw materials inflation cycles have learned that Ontex cannot swiftly pass a sizable inflation and we expect it will need at least a few quarters to do so. We have already lowered our adj EBITDA forecasts recently and forecast a 3% y/y drop in adj EBITDA. We still see larger strategic moves like a combination with a US-focused peer as an eventual end game for Ontex, given the limited structural growth of its industry and the limitations to operational improvements. We do consider valuation to be attractive enough for maintaining our Accumulate rating and €5 TP.