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On Thursday, Barclays (LON:BARC) analyst Vlad Sergievskii adjusted the price target for Schindler Holding AG (SCHP:SW) (OTC: SHLAF), increasing it to CHF270 from CHF260, while reaffirming an Overweight rating on the stock. This adjustment reflects a modest upgrade following the company’s fourth-quarter results of 2024 and full-year 2025 guidance.
Schindler’s fourth-quarter results showed a slight miss in orders by 1%, with adjusted EBIT figures broadly aligning with expectations. However, the company announced a significant dividend increase of 20%, raising it to 6 CHF per share. The guidance for the fiscal year 2025 indicates modest growth and a slight improvement in underlying margins, despite facing pricing and volume challenges, particularly in the Chinese market.
The company’s free cash flow (FCF) for the fourth quarter was notably strong, with cash conversion exceeding 200%. This surge was attributed to a substantial increase in payables, but it is anticipated that there will be headwinds in net working capital moving forward. A review of the accounting practices suggested that approximately 75% of the adjusted EBIT improvement in 2024 could be attributed to a lower bad debt allowance and changes in inventory write-offs.
Sergievskii notes that although Schindler’s stock does not appear inexpensive with a 4% free cash flow yield estimated for 2025, it offers limited exposure to the Chinese market compared to other listed lift original equipment manufacturers (OEMs). The analyst also sees a credible case for gradual self-improvement for the company over the coming years. With a slight 1% increase in forward EBIT estimates and a 4% higher price target, Barclays maintains a relative Overweight rating on Schindler shares.
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