On Tuesday, Deutsche Bank maintained a positive outlook on Schindler Holding AG (SCHN:SW) (OTC: SHLAF), raising the shares target to CHF 261.00 from CHF 246.00 and reaffirming a Buy rating.
The firm anticipates Schindler's third-quarter results, due on October 17, to reflect ongoing margin improvements as the company works through less profitable contracts.
The updated financial targets take into account foreign exchange rates and wage inflation, yet still project an approximate 8% compound annual growth rate (CAGR) for adjusted EBIT and about 9% for adjusted EPS from FY23 to FY26.
Schindler's limited exposure to the Chinese market and its existing base of installed units are seen as advantageous for the company's growth. Deutsche Bank's forecasts for FY24 and FY25 are consistent or slightly more optimistic than the consensus.
Despite the uncertainty in segmental revenues, the bank expects a continued increase of around 7% in maintenance revenue and a significant 15% rise in modernization revenue year-over-year, starting from a small base.
The bank's analysis suggests that Schindler is less inclined towards mergers and acquisitions compared to its peers, predicting minimal inorganic growth in the third quarter. The forecast includes a steady rise in maintenance and modernization revenues, coupled with a continued decrease in new equipment revenues from China.
In summary, Deutsche Bank's updated valuation of Schindler Holding AG reflects confidence in the company's strategic focus on profitability and operational efficiency. The increased price target is supported by the company's expected financial performance and growth trajectory over the next few years.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.