On Thursday, HSBC (LON:HSBA) analyst Parash Jain adjusted the firm's stance on Kuehne + Nagel International AG (KNIN:SW) (OTC: KHNGY) stock from a "Reduce" to a "Hold" rating. Accompanying this upgrade, the price target was also increased from CHF225.00 to CHF255.00.
The revision reflects HSBC's reassessment based on improved earnings estimates and lower weighted average cost of capital (WACC) assumptions. According to the analyst, the optimistic outlook shared during the company's results briefing suggests that earnings should continue to improve, bolstered by favorable freight rate developments in the market.
Despite the positive forecast, the analyst expressed caution regarding the sea freight sector. There is a potential downside in the fourth quarter due to the possible return of overcapacity. This concern is tempered by the current stock valuation, which trades at approximately one standard deviation above the average of consensus 12-month forward EV/EBIT and PE multiples.
HSBC's updated position indicates that the positive earnings momentum anticipated in the second half of the year is already reflected in Kuehne + Nagel's stock price. Consequently, the firm believes the stock is now fairly valued, justifying the upgrade to a "Hold" status.
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