On Thursday, Deutsche Bank (ETR:DBKGn) adjusted its outlook on KION Group AG (KGX:GR) (OTC: KIGRY) shares, reducing the price target to €57 from the previous €57 while sustaining a Buy rating on the stock. The revision reflects a more cautious stance due to a change in market demand expectations and conservative revenue assumptions.
The firm's analyst pointed out that while KION’s financial year 2024 EBIT guidance has been narrowed due to solid execution in the first half of the year, the company no longer anticipates a slight growth in market demand for the current year. This adjustment comes despite a positive reset in order expectations for the second half of the year.
The analyst noted that there are increasing uncertainties regarding KION's revenue growth potential for the next year. However, it was argued that orders could rebound significantly once the interest rate environment improves and that the company's revenue should benefit from the continued growth in services, which account for 45% of the group's business.
In response to these factors, Deutsche Bank has chosen to apply more conservative revenue assumptions, leading to a 5-6% reduction in earnings per share estimates over the next few years. This recalibration has prompted the cut in the price target to €57.
Despite the lowered price target, the analyst highlighted that KION's stock remains attractively valued, trading at an estimated 9 times price-to-earnings and 8 times enterprise value to EBITA for the year 2025.
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