Schindler Group has outperformed its peers this year, leading Deutsche Bank to downgrade the stock to "hold" from "buy." The price target has been cut to CHF259 from CHF287.
The move reflects limited upside following its strong relative performance within a sector that remains under pressure.
According to Gaël De Bray, CFA, Research Analyst at Deutsche Bank AG (ETR:DBKGn), the broader European industrials sector has only partially adjusted to slowing fundamentals.
The one-year forward price-to-earnings (P/E) ratio for the sector has fallen by four turns since its peak in early March, but that is still short of the average seven-turn compression seen in prior industrial downturns.
While the sector has underperformed the STOXX Europe 600 by 10 percentage points since the peak, it continues to trade at a roughly 30% premium — a level that suggests further downside risk remains.
Deutsche Bank analyzes the extent of earnings growth or decline implied by current valuations for each stock it covers, and then models a more stressed scenario for 2025. The goal is to assess how much risk is already priced in.
The analysis finds that the recent declines in Legrand (EPA:LEGD) and Alstom (EPA:ALSO), both rated “buy,” appear overdone, with market pricing suggesting a more severe earnings hit than the fundamentals support.
Schindler shares were trading lower on Thursday following the downgrade.
