IONOS shares fall after Metzler issues sell rating

IONOS shares faced significant downward pressure on Wednesday following a negative analyst report from Metzler. The bank issued a ‘Sell’ rating and lowered its price target for the company to 28.50 euros.

Analyst Veysel Taze noted that while IONOS management is attempting to pivot the company’s investment narrative toward cloud services and artificial intelligence, the firm remains primarily a traditional web host. Consequently, the analyst does not believe the company qualifies for the high-tech valuation premiums typically granted to software-as-a-service (SaaS) providers or companies with highly scalable platform revenues.

Although the analyst acknowledged accelerated growth dynamics that could help IONOS reach revenue and margin targets by 2027, concerns remain regarding technological weaknesses that may hinder a successful transformation into a cloud-based business model. The stock's decline also impacted the shares of its parent company, United Internet.