On Wednesday, Barclays (LON:BARC) adjusted its stance on DHL Group (DHL:GR), downgrading the stock from Overweight to Equalweight and lowering the price target to €37.50 from the previous €44.00. The revision reflects concerns over potential further downside risks to the company's forecasted earnings before interest and taxes (EBIT) for the fiscal year 2026, which is projected to be greater than €7.0 billion.
According to Barclays, while DHL is poised to benefit from its association with global trade growth in the long term, there are increasing risks for the fiscal year 2025. The firm's 2030 strategy and roadmap, deemed as an aspirational goal, are seen as contingent on a seamless combination of economic, policy, and political developments.
Barclays has recalculated its sum-of-the-parts (SOTP) price target of €37.50 based on revised forecasts for 2025. This new target also incorporates a more conservative approach to enterprise value to EBIT (EV/EBIT) multiples. The revised multiples are believed to more accurately reflect the historical median values of DHL's peers across different sub-sectors.
Furthermore, Barclays has applied a 20% conglomerate discount to the valuation, considering the diverse operations within the DHL Group. This strategic move by Barclays suggests a shift towards a more cautious outlook on the logistics giant's financial performance in the near to mid-term future.
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