Barclays upgrades DHL rating to "Overweight," target price increased by 26%, stock price rises

Investing.com - Barclays upgraded DHL Group’s rating from “Hold” to “Buy” on Friday and raised the 12-month target price from €43 to €54, citing tighter air freight supply conditions due to Middle East geopolitical tensions, which are favorable for the German logistics group and have driven the stock up over 2%.

The stock closed at €45.89 on March 5, implying a potential upside of 17.7%.

According to Barclays citing TheLoadStar, after the Gulf airspace closures and Middle Eastern airlines suspending flights, air freight capacity on key Eurasian routes has decreased by about 40%, with these airlines accounting for approximately 13% of global air freight capacity.

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Based on DHL’s 2026 business overview presentation, DHL ranks first in the European express market with a 51% share, 63% in the Middle East and Africa, and 57% in the Asia-Pacific region.

Barclays has raised its 2026 EBIT estimate by about 2% to €6.5 billion, exceeding DHL’s own guidance of over €6.2 billion by 5%. “We believe that an EBIT guidance above €6.2 billion for 2026 implies zero growth in express/supply chain/e-commerce EBIT and a year-over-year decline in postal/freight forwarding EBIT before cost savings,” the analyst said.

The bank expects organic EBIT growth in the express business of €280 million before cost savings, while the guidance implies zero growth in express EBIT.

Without the €400 million incremental cost savings from DHL’s guidance, Barclays estimates freight forwarding EBIT could decline by up to €150 million year-over-year, and postal parcels EBIT could decrease by up to €250 million.

The group’s FY2026 EPS is projected at €3.46, rising to €4.21 by FY2028, compared to Bloomberg consensus of €3.31 for FY2026 as of March 5. Revenue is expected to reach €86.5 billion in FY2026 and €94.2 billion by FY2028.

Barclays has lowered the group’s discount from 20% to 10%, resulting in a sum-of-the-parts valuation of €60 per share before discount. The express division is assigned an EV/EBIT multiple of 14.0x, valuing it at €51.4 billion.

In an optimistic scenario, with FY2026 EBIT approaching €7 billion, the target price would be around €61. In a downside scenario, the target price is €42.

DHL generates only about 5% of its revenue from the Middle East, but Barclays notes that the disruption extends to broader Eurasian trade routes, where DHL holds the strongest market position. The reopening of the Red Sea and increased competition outside the US are listed as major downside risks.

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