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Investing.com -- Bernstein Research downgraded DHL Group (ETR:DHLn) to “market-perform” from “outperform” and lifted its 12-month price target slightly to €42.80 from €42, citing muted trade recovery prospects and a lack of near-term catalysts despite strong cost control, in a note dated Friday.
Analyst Alex Irving said the downgrade reflects DHL’s reliance on macro conditions and slower international trade, adding that rival DSV offers stronger merger-related catalysts. DHL’s stock closed at €39.81 on Nov. 5, leaving about 8% upside to the new target.
Fiscal 2025 adjusted earnings per share are projected to rise to €2.97 from €2.75 in 2024, while EBIT is expected to increase to €6 billion from €5.82 billion. EBIT is forecast at €6.55 billion in 2026.
The operating margin is seen improving from 7.0% to 7.4% next year and 7.7% in 2026. Free cash flow is projected to grow from €2.96 billion to €3.34 billion in 2025 and €3.57 billion in 2026.
DHL’s adjusted P/E multiple is estimated at 13.4x for 2025, down from 14.5x in 2024, while EV/EBIT is expected at 12.3x, falling from 12.7x.
The company’s market capitalization stands at €51.5 billion and enterprise value at €73.7 billion. Its dividend yield is 4.3%.
Bernstein’s discounted-cash-flow valuation assumes a 9% weighted average cost of capital, 11.4% cost of equity and 4% terminal growth rate, implying a fair value near €44, broadly in line with the new price target.
The downgrade follows DHL’s third-quarter results, where EBIT beat consensus by 15% on reported figures and 12% excluding one-offs.
Despite “Liberation Day” tariffs and the end of de minimis shipping exemptions, DHL maintained its full-year EBIT guidance above €6 billion, a surprise to investors who had expected a cut.
At the segment level, Express delivered a 1% EBIT beat, with shipments per day down 10.6% year-on-year but margins rising to 11.8% as aviation costs fell 8.5%. Post & Parcel outperformed expectations with a 33% EBIT beat, helped by 12% parcel growth and stable staffing costs.
Supply Chain earnings were steady, while Global Forwarding remained under pressure from weaker ocean freight yields.
E-commerce benefited from a one-time €178 million gain from the deconsolidation of DHL Commerce UK.
Bernstein’s divisional forecasts for 2025 show Express generating about €3.14 billion EBIT, Supply Chain €1.16 billion, Post & Parcel €1.05 billion, Global Forwarding & Freight €0.85 billion, and eCommerce €0.25 billion.
Express remains DHL’s largest profit driver, contributing roughly half of group EBIT, followed by Supply Chain at 15-20% and Freight at 10-15%.
Year-to-date, DHL shares have gained 26.3%, outperforming the Bloomberg Europe Developed Markets Index by 1.5 percentage points. The stock has traded between €30.96 and €44.30 over the past 12 months.
While Bernstein raised its 2030 long-term earnings forecast to €10 billion EBIT, it said a stronger macro recovery is needed before investors see further upside. “DHL remains in large part subject to the macro,” the brokerage said. “A recovery would be the most important driver to see a larger re-rating.”