On Thursday, BofA Securities adjusted its stance on DHL Group (DHL:GR) stock, shifting the rating from Buy to Neutral and lowering the price target to €40.00 from the previous €46.00.
The revision reflects concerns over the demand outlook for 2025, citing potential risks such as trade tariffs, changes to de minimis rules in the United States, and global demand headwinds. Additionally, a weak macroeconomic environment in Germany is expected to continue affecting the company's performance.
The analyst from BofA Securities indicated that the lowered expectations for 2025-26E EBIT by 2% are now below the consensus for 2025. Consequently, the sum-of-the-parts (SOTP)-based price objective has been reduced to €40.00, factoring in both the revised estimates and target multiples.
Despite the shares trading at a price-to-earnings (P/E) ratio of 12 times the 2025E earnings, which is below the historical average of 13 times, the firm expressed difficulty in identifying catalysts that could lead to a revaluation of the stock.
The report further elaborates on the pricing of DHL Group's shares, which does not appear expensive at the current valuation. However, the lack of clear triggers for a potential increase in the stock's rating poses a challenge for investors. The analyst's perspective suggests a cautious approach to the stock, given the multiple factors that could influence DHL Group's financial performance in the near future.
In closing, BofA Securities prefers DSV over DHL Group, although no further details on this preference were provided in the context. The downgraded outlook and price target for DHL Group reflect a careful analysis of the external economic factors and company-specific forecasts that could impact the company's growth and profitability in the coming years.
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