Citi Research upgraded Holcim to a "buy" rating from "neutral," setting a SFr80 target price after a 15% share price decline it deemed an overreaction to EU carbon market reform fears. The Swiss building materials group has fallen behind cement peers as European Union Allowance (EUA) prices dropped roughly €20 per tonne since mid-January, hitting ten-month lows around €66 per tonne amid political pressure to overhaul the EU Emissions Trading System.

Despite the selloff, Holcim's core cement pricing in Europe has remained resilient. The company confirmed implementing a mid-single-digit percentage price increase as planned during its earnings call. Citi noted cement pricing has historically shown asymmetric exposure to CO2 costs, holding firm when carbon prices fall. When EUA prices dropped roughly 40% in 2024 to below €55 per tonne, European cement prices still rose 2%.

The brokerage's base case envisions limited ETS reform, with a lower Linear Reduction Factor extending the EU ETS cap beyond 2040 and slower phase-out of industrial free allocations under the Carbon Border Adjustment Mechanism. Should reforms remain limited to these measures, EUA prices are likely to rebound toward €80 per tonne on a 6-12 month view, supported by a 200 million tonne supply deficit this year.