UBS has downgraded Gerresheimer AG to a "sell" rating, slashing its price target to €12.90 from €29 amid mounting deleveraging concerns. The German packaging company's shares fell 4% on Tuesday following the brokerage's warning about elevated leverage levels and reduced growth expectations.

UBS estimates Gerresheimer's leverage reached approximately 4.9x at the end of FY25E, exceeding the prior covenant level of 4.25x. The firm expressed uncertainty about the updated covenant terms following debt renegotiations in August 2025. The downgrade comes after Gerresheimer announced plans to sell assets including Centor and Moulded Glass to support deleveraging, though UBS views the latter as particularly challenging to offload given market weakness.

The brokerage reduced its adjusted EBITDA margin forecasts by 2.0 percentage points for FY25 and cut its price target to €12.9 based on a discounted cash flow model. UBS now expects FY25 revenue of €2.28 billion with adjusted EBITDA of €379 million, projecting net debt to EBITDA at 5.5x. The revised forecasts imply an 18% reduction in enterprise value and a 56% cut in equity value, reflecting the significant weight of net debt at approximately 80% of enterprise value.