Comet Holding AG: A Contrarian Bet on Semiconductor Growth Amid Market Mispricing

Comet Holding AG (VTX:COTN) has experienced a 23% stock price decline in early July 2025, despite reporting a 20% year-over-year increase in net sales for the first half of 2025, driven by a 42.4% surge in its Plasma Control Technologies (PCT) division [1]. This underperformance, coupled with a valuation that appears to lag behind its industry peers, raises a compelling question for contrarian value investors: Is Comet’s stock mispriced, offering an opportunity to capitalize on its strategic positioning in the AI and logic chip boom?

A High-Growth Sector with Mixed Signals

The semiconductor industry is projected to grow at 10–15% in 2025, with AI-driven demand for logic chips accelerating at over 30% annually [2]. Comet’s PCT division, which supplies plasma control systems critical for advanced microchip production, has become a linchpin of this growth. Its Synertia® platform, enabling real-time plasma process optimization, has driven a 37.5% Q1 2025 sales increase and is expected to account for over 80% of the company’s revenue in the next three to five years [3]. Yet, the Industrial X-Ray Systems (IXS) and Industrial X-Ray Modules (IXM) divisions have underperformed, with IXM’s EBITDA margin declining to 15.4% in 2024 from 23.8% the prior year [1]. This uneven performance has pressured overall margins, with Comet’s EBITDA margin slipping to 9.1% in H1 2025 from 13.6% in 2024 [1].

Valuation Metrics Suggest Undervaluation

Comet’s trailing P/E ratio of 35.27 and forward P/E of 30.44 as of August 2025 trail the semiconductor industry’s average P/E of 40.41 [4]. Its price-to-book (P/B) ratio of 4.11x also lags behind peers like AMD (99.7x) and TSMC (27.28x), though it exceeds the industry’s typical range of 1.94–2.63 [5]. Analysts project a normalization of Comet’s P/E to 22.4x by 2026, suggesting potential upside if the company meets revised guidance of CHF 460–500 million in 2025 sales [1]. The stock currently trades at a 20% discount to its estimated fair value of CHF 281.53, according to Simplywall Street [6].

Institutional Sentiment and Strategic Resilience

Institutional ownership of Comet has shifted recently, with BlackRock increasing its stake by 1.2% while Fidelity reduced its holding by 0.5% [7]. UBS Asset Management AG, the largest institutional shareholder at 10%, has maintained a stable position despite the stock’s volatility. The company’s low debt-to-equity ratio of 19.4% and levered free cash flow of CHF 32.13 million in the trailing twelve months underscore its financial resilience [8]. However, UBS downgraded its rating to Neutral in July 2025, citing slower-than-expected growth in Comet’s semiconductor segment [9], while RESEARCH PARTNERS AG upgraded its recommendation to Buy, projecting a 72.80% upside [10].

Contrarian Case for Investment

Comet’s underperformance appears to reflect overcorrection to macroeconomic and geopolitical risks rather than fundamental weakness. The company’s strategic investments in AI-driven x-ray inspection systems (e.g., the CA20 system) and R&D for next-generation plasma technologies position it to benefit from the AI chip market’s projected $341 billion size by 2033 [3]. While margin pressures and revised guidance highlight near-term challenges, the long-term growth trajectory of its PCT division—anchored by a 31.2% CAGR in AI chip demand—suggests the market may be underestimating its potential [2].

Risks and Considerations

Investors must weigh the cyclical nature of the semiconductor industry and Comet’s exposure to volatile segments like NAND and IXS. Adverse currency effects and product mix challenges could further pressure margins in 2025 [1]. Additionally, the stock’s 0.79% dividend yield and 0.33 payout ratio indicate a conservative approach to shareholder returns, which may appeal to income-focused investors but could limit short-term upside.

Conclusion

Comet Holding AG’s recent underperformance, coupled with a valuation that lags its industry peers and a strong balance sheet, presents a compelling contrarian opportunity. While the company faces near-term headwinds, its strategic alignment with the AI and logic chip boom—backed by institutional confidence and a robust R&D pipeline—positions it to outperform in the long term. For value investors willing to navigate short-term volatility, Comet offers a rare blend of undervaluation and high-growth potential in a sector poised for transformation.

Source:
[1] Comet delivers strong sales growth in the first half-year [https://comet.tech/en/news/2025/7/comet-delivers-strong-sales-growth-in-the-first-half-year-revised-outlook-reflects-market-uncertainty]
[2] AI Chip Market Size, Statistics, Facts | CAGR of 31.2% [https://market.us/report/ai-chip-market/]
[3] Outlook for 2025 [https://reports.comet-group.com/24/outlook-for-2025]
[4] PE ratio by industry [https://fullratio.com/pe-ratio-by-industry]
[5] Price/Book(PB) Ratio of SPEL SEMICONDUCTOR [https://www.smart-investing.in/pb-ratio.php?Company=SPEL+SEMICONDUCTOR+LTD]
[6] Comet Holding (SWX:COTN) Stock Valuation, Peer [https://simplywall.st/stocks/ch/tech/vtx-cotn/comet-holding-shares/valuation]
[7] Exploring Comet Holding (0ROQL): Who's Buying and Why? [https://dcfmodeling.com/blogs/investors/0roql-investor-profile?srsltid=AfmBOor4pEtqMQKfhMGL1dsvz3ZqM_pduSx47L7MXpYp8vjnkAIUMpTQ]
[8] Comet Holding (COTN) Balance Sheet & Financial Health [https://simplywall.st/stocks/ch/tech/vtx-cotn/comet-holding-shares/health]
[9] Comet Holding stock rating downgraded to Neutral by UBS [https://www.investing.com/news/analyst-ratings/comet-holding-stock-rating-downgraded-to-neutral-by-ubs-on-slower-growth-93CH-4211906]
[10] RESEARCH PARTNERS AG Upgrades Comet Holding [https://www.nasdaq.com/articles/research-partners-ag-upgrades-comet-holding-swx-cotn]