JFrog stock rises as Cantor Fitzgerald maintains Overweight rating after strong Q2
Wednesday - Shares of DHL Group (DHL:GR) received a boost following Jefferies’ initiation of coverage with a Buy rating and a price target set at EUR60.00. The new rating comes as the firm sees potential in the company’s ability to balance its network and capitalize on growth opportunities.
Jefferies highlighted that DHL Express had previously expanded its capacity faster than demand, leading to cost inefficiencies and reduced margins. However, the firm notes that although demand has not yet seen a significant uptick, cost-reduction measures are helping to realign the company’s operations.
The analyst pointed out that industrial weakness in Europe had prolonged the post-Covid downturn, but with the European market expected to recover, demand for DHL’s services is anticipated to rise. Jefferies emphasized that the company’s valuation is well-supported by its Express division alone, yet there is additional value in its growing eCommerce segment and the Supply Chain division’s robust return on invested capital (ROIC) of approximately 15%.
The report mentioned that despite the challenges faced in the express shipping sector, DHL Group is positioned to improve as market conditions in Europe change. The analyst’s positive outlook on the company is based on the expectation that DHL’s strategic actions will lead to a more efficient network and that the firm will benefit from the growth in eCommerce.
In conclusion, Jefferies has identified DHL Group as a Top Pick in the Transport sector, underlining the company’s potential to utilize excess capital effectively and to expand its presence in the growing eCommerce market. The EUR60.00 price target suggests confidence in the company’s strategy and future performance.
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