European logistics stocks face pressure as key players signal guidance changes

European logistics stocks are facing significant headwinds, with softening demand and declining freight rates expected to drive full-year guidance cuts across the sector, as Q3 volumes weakened. Analysts anticipate most major players will lower outlooks, highlighting a divergence between DSV and DHL. DSV is positioned as an 'outperform' due to its successful DB Schenker integration and perceived undervaluation, despite a revised 2025 EBIT guidance cut, with over 20% upside potential. In contrast, DHL is pressured by its asset-heavy structure and slowing volumes, leading to an expected 2025 EBIT guidance reduction and a lowered price target, though it retains long-term e-commerce growth potential, with upcoming Q3 earnings reports crucial for sector clarity.

Analysis

The European logistics sector is facing a challenging outlook characterized by softening demand, weakening Q3 volumes, and falling freight rates, which is expected to prompt widespread cuts to full-year guidance. Within this environment, a clear divergence in performance and strategy is emerging between major players. DSV is presented as a compelling M&A integration story, with its acquisition of DB Schenker reportedly progressing well and offering the potential for accelerated synergy realization. Despite analysts at Bernstein slightly narrowing the top end of their 2025 EBIT guidance for DSV to DKK 19.5 billion-20.5 billion, they maintain an "outperform" rating and a DKK 1,700.00 price target, implying over 20% upside from its late September price and flagging the stock as undervalued. Conversely, DHL is pressured by its asset-heavy structure and high exposure to slowing global trade, with analysts expecting the company to lower its 2025 EBIT guidance to >€5.8 billion. This has resulted in a price target reduction from €43 to €42 by Bernstein. While DHL retains long-term growth drivers in e-commerce, it faces significant short-term volume risks, particularly in airfreight, positioning it as a reflection of the sector's broader macroeconomic strain.

Key Decisions for Investors

• Investors should evaluate the diverging fundamentals within the European logistics sector, potentially favoring company-specific restructuring stories like DSV over asset-heavy models like DHL that are more exposed to broad cyclical downturns.
• For investors with a medium-term outlook, DSV may warrant consideration given its 'outperform' rating, perceived undervaluation, and a price target suggesting significant upside based on confidence in its DB Schenker integration.
• Holders of DHL should closely monitor upcoming Q3 earnings for any confirmation of the expected guidance cut and for specific data on volumes in its Express division, as further weakness could intensify pressure on the stock.
• Given the high probability of negative guidance revisions across the sector, a cautious stance on broad logistics exposure is prudent until Q3 results provide greater clarity on the magnitude of the demand slowdown.