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On Tuesday, Citi analysts upgraded DHL Group stock (DHL:GR) from Neutral to Buy, citing a revised price target of €48, up from €40. The decision follows a detailed analysis of DHL’s Express division, which represents a significant portion of the company’s projected 2024 earnings.
According to Citi, the Express division has been underutilized due to a decline in daily time-definite international (TDI) volumes since 2021. Analysts believe the market is undervaluing the potential for EBIT margin growth as volumes recover. Citi projects a 2026 express EBIT margin of 13.4%, compared to the company’s consensus of 12.7%.
The analysts have also adjusted their 2026 earnings per share (EPS) estimate to €3.61, which is approximately 5% higher than the current consensus. This adjustment reflects the anticipated recovery in volumes and improved margins.
Citi highlighted that DHL stock is currently trading at 1.5 standard deviations below the average forward price-to-earnings (PE) ratio for the fiscal year. This valuation, combined with the expected recovery, presents an attractive risk/reward opportunity, prompting the upgrade and revised price target.
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