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Investing.com -- Barclays has initiated coverage of Dormakaba Holding AG with an “overweight” rating and a price target of CHF880, implying a 23.1% upside from its September 9 closing price of CHF715.
The brokerage described the Swiss access solutions company as “a classic self-help story” with favorable market dynamics and argued that “execution against sizeable self-help programmes, which we think will drive faster margin expansion than the market currently prices in.”
Dormakaba, one of the top three players in the $100 billion global access solutions market, generates around 90% of its revenue from commercial and institutional customers.
Its Access Solutions business accounts for roughly 60% of sales, supported by services and project work. About half of its Access Solutions revenue comes from the U.S., Canada, Germany and Switzerland, with the U.S. flagged as the strategic priority.
Barclays noted management’s plan to increase U.S. sales from CHF722 million to more than CHF1 billion by fiscal 2027/28, highlighting the company’s “renewed regional strategic focus and breadth of dormakaba’s offering, particularly in areas requiring at-scale technical competence.”
Financially, Dormakaba reported revenue of CHF2.84 billion and adjusted EBITDA of CHF417 million in 2024. Net income reached CHF152 million, with earnings per share at CHF35.94.
Barclays projects revenue to rise modestly to CHF2.87 billion in 2025 and CHF3.04 billion in 2027, while adjusted EBITDA is expected to expand to CHF543 million by 2027.
The brokerage forecasts net income of CHF179 million in 2027, with adjusted EPS increasing to CHF42.51.
Margins are set to improve, with EBITDA margins rising from 14.7% in 2024 to 17.9% in 2027, while adjusted pre-tax margins climb from 11% to 13.7%. Free cash flow is forecast to grow from CHF197 million in 2024 to CHF283 million in 2027 .
Barclays said Dormakaba still lags rivals Assa Abloy and Allegion in profitability, citing its higher selling, general and administrative costs, which run 400 to 600 basis points above peers.
Management has targeted over CHF220 million in structural savings by fiscal 2027/28, including procurement, automation and product streamlining measures.
These are expected to add 250 basis points to adjusted EBIT margins. “We see no structural reason for dormakaba to not have margins comparable to its peers,” Barclays said.
The brokerage also flagged Dormakaba’s underused balance sheet, with net debt at 23.6% of market capitalization in 2024 and net debt-to-EBITDA of about 1x.
That, Barclays said, leaves “ample balance sheet optionality” for acquisitions, particularly in the U.S., where the top three players together hold about one-third of the market.
Dormakaba’s acquisitions have added less than 2% to sales annually over the past decade, compared to 2-4% for peers.
Despite what Barclays sees as above-sector earnings potential, Dormakaba trades at a 10-15% discount to peers on both P/E and EV/EBIT.
On 2026 estimates, the stock trades at 19.5 times earnings. Barclays said comparable “quality” industrials with similar returns trade at a 25% premium, which it applied in setting its CHF880 target.
“The company is part-way through a self-help journey that once finished will likely result in a much-improved franchise quality,” the brokerage said.