Kion downgraded to “hold” as rally limits upside, margin risks remain

Investing.com -- Jefferies has downgraded Kion Group AG (ETR:KGX) to “hold” from “buy,” citing reduced upside potential following an about 68% year-to-date rally. 

The rating change comes with a raised price target of €57 from €51, representing a modest 7% upside from the July 8 closing price of €53.40.

The re-rating in Kion’s stock price was driven largely by valuation expansion rather than earnings growth. 

The company’s 2025E P/E has climbed from 9x to 17x, while 2026E rose from 7x to 13x, now in line with the long-term average. 

Estimates for adjusted EBIT and orders have been revised modestly higher, but not enough to justify further upside, according to the report.

In the Industrial Trucks & Services segment, which includes forklifts, orders and revenue were broadly in line with Visible Alpha consensus. 

Orders grew slightly in unit and value terms, while adjusted EBIT margins declined due to revenue pressure and weaker utilization.

Jefferies projects ITS EBIT margins recovering to 10.5% by 2027, supported by execution of the company’s efficiency program and volume leverage.

Stronger momentum was seen in the Supply Chain Solutions division. Orders reached Q1 levels by May and were expected to exceed €1 billion in June, surpassing the €792 million consensus. 

Adjusted EBIT margins in SCS are forecast to improve from 6.3% in 2025 to 9.3% in 2027. 

Jefferies raised SCS EBIT estimates by up to 16% and cited continued backlog execution and sequential improvement.

Group revenues are forecast to fall 2.8% to €11.18 billion in 2025 before recovering to €12.17 billion by 2027. Adjusted EBIT is projected at €818 million in 2025, rising to €1.14 billion by 2027. 

Margins are expected to reach 9.3% by 2027, still short of the company’s 10% target. EPS is estimated at €3.11 in 2025, growing to €4.68 in 2027.

Risks flagged include delays in Germany’s stimulus rollout, which could stall forklift demand, and potential lower dividends as Kion aims to restore its investment-grade credit rating. 

Despite some recovery signs in factory orders and strong automation demand in the U.S., Jefferies believes the market’s focus will now shift to earnings delivery.

The stock’s re-rating has removed valuation tailwinds, placing pressure on fundamentals. 

Jefferies now values Kion at 14x P/E on 2026E earnings, up from 13x previously, but sees limited catalysts to support further revaluation.