Jefferies upgrades Kardex stock rating citing demand recovery

Jefferies upgraded Kardex AG (KARN:SW) from Hold to Buy, raising the price target to CHF300.00 from CHF270.00, citing a more sustainable demand recovery for Remstar and Mlog solutions and stabilization of orders at system integrators. The upgrade is further supported by Kardex's upgraded medium-term revenue guidance of €1.5 billion by 2029/31, indicating a 10-14% compound annual growth rate. While Jefferies lowered 2025 and 2026 estimates due to increased operational expenses, they raised order intake estimates for 2025, anticipating upgrades from 2027 onwards.

Analysis

Jefferies analysts have upgraded Kardex AG (KARN:SW) to Buy from Hold, increasing the price target to CHF300.00 from CHF270.00, primarily due to a recent share price correction and an anticipated sustainable recovery in demand for Kardex’s Remstar and Mlog solutions. This positive outlook is supported by the stabilization of orders at system integrators following a significant investment cycle between 2020 and 2022. Kardex itself has issued upgraded medium-term guidance, targeting €1.5 billion in revenue by 2029/31, which implies a substantial compound annual growth rate (CAGR) of 10-14%, up from a previous estimate of 5-7%, largely driven by the geographical expansion of AutoStore and Mlog solutions. Despite this optimism, Jefferies has adjusted its near-term estimates, lowering them for 2025 and 2026 by 8% and 2% respectively, to account for announced operational expenditures in sales, marketing, and research and development. However, they have simultaneously raised order intake estimates for 2025, projecting that this will lead to earnings upgrades from 2027 onwards. While challenges such as US tariff policies impacting industrial confidence persist, Jefferies sees potential for continued cyclical recovery, fueled by factors like personnel shortages and rising costs, reinforcing their constructive view on Kardex's growth trajectory.

Key Decisions for Investors

• Investors may consider the upgrade to 'Buy' and the increased price target of CHF300.00 as a signal to re-evaluate positions in Kardex AG, potentially reflecting an attractive entry point post-correction.
• Monitor Kardex's ability to manage the announced increases in operational expenses in 2025 and 2026 and their impact on near-term profitability, whilst looking for confirmation of the anticipated higher order intake driving growth from 2027.
• Closely track the execution of Kardex's geographical expansion plans for AutoStore and Mlog solutions, as this is a key underpinning for the ambitious 10-14% CAGR target through 2029/31.
• Factor in external variables such as US tariff policies and the broader cyclical recovery trends, including labor shortages and cost inflation, which could influence demand for Kardex's automation solutions.