Goldman Sachs Lifts Kuehne + Nagel to Buy Rating on Signs of Margin Bounce

Kuehne + Nagel (SWX: KNIN) saw its shares lift over 3.8% following Goldman Sachs' upgrade from sell to buy, citing an expected upswing in profit margins. After several sluggish years, the investment bank believes this freight and logistics operator has hit a cyclical low in earnings and is gearing up for a comeback.

The research team noted that earnings before interest and taxes (EBIT) margins across Kuehne + Nagel's air, sea, and road divisions fell notably below their typical range in 2025. The EBIT-to-gross-profit margin dropped to 23% in H2 2025 and averaged 27% for the full year, compared to a 20-year norm of around 33%. The last record low was 26%, back in 2009.

Goldman Sachs highlighted how consensus earnings estimates have been slashed by roughly 25% over the year, with the stock lagging behind competitors like DHL, DSV, and Maersk by approximately 35% in the last twelve months. These numbers helped prompt the bullish shift and a considerable increase in the 12-month price target from CHF 147 to CHF 210.

That fresh target implies an upside of some 18% from the current share price - a figure fueled by expectations of improved cash flow and earnings, coupled with a slight drop in the firm's weighted average cost of capital, now standing at 6.0% versus 6.5% previously. Goldman cautioned that Q1 profits will likely remain soft due to restructuring expenditure but anticipates clearer benefits from cost-cutting and operational tweaks kicking in from Q2 onward.

To tighten the belt, the company has rolled out a CHF 200 million cost reduction plan. The brokerage foresees a quarterly EBIT run rate stabilizing near CHF 350 million between Q2 and Q4 2026, despite moderate dips in gross profit per unit.

While Goldman's 2026 EBIT forecast of CHF 1.32 billion aligns with consensus expectations, it foresees Kuehne + Nagel eventually closing the gap created by years of downward revisions. Over the 2026-2030 window, they model steady EBIT growth around 5% annually and EPS growth near 6%, reflecting the low base levels currently in place.

Valuation metrics also support the positive stance. The stock trades near 20 times projected 2027 earnings, slightly below its 15-year median of 21 times, and an enterprise value to EBIT multiple of 16.5, under the decade average of 18 pre-pandemic. Although working capital demands remain elevated, cash conversion has improved compared to previous years.

Kuehne + Nagel offers an estimated 5% free cash flow yield and a 3% to 4% dividend yield over the forecast period. The upgrade marks a reversal since Goldman Sachs tagged the stock as a sell back in 2019, a time when the shares have only climbed about 20%, noticeably lagging broader European indexes and sector peers.