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Investing.com - Bernstein SocGen Group has reiterated an Outperform rating on DHL Group (DHL:GR) with a price target of EUR43.00, highlighting the company’s diverse logistics operations and growth potential.
The research firm describes DHL as "five logistics companies under a single corporate umbrella" and views it as a solid medium to long-term investment at an attractive price. According to Bernstein SocGen, DHL’s earnings are significantly exposed to e-commerce and world trade, with approximately 80% of EBIT linked to the former, 70% to the latter, and 60% to both sectors.
More than half of DHL’s earnings come from its Express division, which Bernstein SocGen characterizes as "a healthy three-player oligopoly with supportive pricing and GDP-plus structural growth." While the asset-heavy nature of this division creates some volume risk and potential pressure on airfreight rates, the firm notes that 25% of capacity is on short-term lease, providing more flexibility than might be apparent.
Bernstein SocGen expects DHL to benefit from an eventual rebound in business-to-business volumes, which should improve asset utilization and boost margins. The firm believes this recovery will require improvement in challenged customer segments including automotive, capital goods, and technology.
The valuation is described as supportive, with investors getting "GDP-plus growth for c. 11x P/E, with a well-covered c. 5% dividend and high single digit FCF yield." With current weak sentiment surrounding the stock, Bernstein SocGen sees an opportunity for investors.
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