Our 12-month target price for ABB is A$6.15/sh based on the average of our DCF and EV/EBITDA valuations.
• DCF valuation at A$6.14/sh with WACC of 9.3%, equity beta of ~0.8 and a real terminal growth of ~2%; and
• EV/EBITDA valuation at A$6.15/sh with 11.3x multiple applied to our 12mth forward EBITDA forecast. This is at a ~20% premium to the average multiple of both large and small cap peers across Australia and NZ.

Key downside risks to our positive view and achieving our target price include:
• Highly competitive market;
• Regulatory risks;
• Great-than-expected step up in capex;
• Threat from 5G Wireless; and
• Economic downturn.