Investing.com -- J.P. Morgan cut freight forwarder DSV to "neutral" from "overweight" and lowered its price target to DKK 1,400 from DKK 2,165, saying the company's Road division will lose more gross profit than the broker had expected.
The broker also removed DSV from its Analyst Focus List.
It said it had "lost conviction" on the strong earnings growth it originally expected after DSV's acquisition of Schenker. The core business is under deeper earnings pressure, which started in Air & Sea and is now also visible in Road, the broker said.
The broker said it was prompted by a better understanding of Road's operational and customer problems after management held group calls in mid-September.
It also cited its own survey of more than 300 DSV customers, conducted in the last week of September. The survey gave DSV a low net promoter score, a customer-satisfaction measure, of 2.5 and indicated the operational problems had not been fully resolved.
Because Road handles a high share of groupage volumes, the analysts said, lost activity falls fully through to earnings. It now assumes Road gross profit will fall 7% year-on-year in both the third and fourth quarters of 2026.
Not finding the right stocks? Our AI's list of investor-grade stock picks for October just dropped »
As a result, it cut its Road operating profit (EBIT) forecast for the third quarter to DKK 412 million from DKK 715 million. For the fourth quarter, it cut the forecast to DKK 580 million from DKK 1.08 billion.
The analysts also lowered its expectation for cost savings from combining Road with Schenker, to DKK 750 million in 2027 from DKK 3.00 billion. It said customer recovery will take time.
Management said on the mid-September call that on-time-in-full delivery had reached 93%, which it described as good enough to start regaining lost volumes.
On Road's outlook, management said, "If I was sitting with your spreadsheet, I would probably take a couple of percentage points off."
Resetting its Road forecasts was the main driver of the broker's cuts to group estimates. It lowered its 2027-2031 earnings-per-share forecasts by about 20% and now expects 2026 group EBIT of DKK 24.23 billion and 2027 EBIT of DKK 26.40 billion, 5% and 14% below its previous forecasts.
The broker said its net income and earnings-per-share estimates for 2027-2031 are about 10% below consensus. It also applied a 50% haircut to the earnings improvements DSV targeted under its "DSV 3.0" programme.
The broker said it still expects earnings growth of about 20% a year, helped by a share buyback it assumes will resume in the first quarter of 2027.
"We acknowledge this has been a disappointing stock call," the broker said. It expects third-quarter results to trigger earnings downgrades. DSV remains its preferred freight forwarder.
Original Article
J.P. Morgan cuts DSV forecasts as Road division woes deepen
U.S., EU telecom stocks fall after SpaceX's move to become a wireless carrier
Teva climbs premarket as FDA approves once-monthly schizophrenia treatment
