RBC flags Kuehne + Nagel valuation as freight rates face reversal

Investing.com -- RBC Capital Markets started coverage of global logistics company Kuehne + Nagel with a "sector perform" rating and a CHF 235 price target, saying the stock looks relatively fully valued at more than 20 times expected earnings through 2028.

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RBC forecasts earnings per share growth of about 8% a year from 2026 to 2030, which it said is lower than DHL and DSV and the lowest of the three. DHL is forecast at about 10% and DSV at 25%.

The broker said freight rates are favourable for gross profit per unit in the second half of 2026, but it expects the tailwind to reverse.

In ocean freight, it expects shipping capacity to grow about 7% a year against demand growth of about 3% a year from 2026 to 2030, as a large number of new container ships are delivered.

In air freight, rates jumped in 2026 partly because of Middle East disruption, and RBC allows for a partial reversal in 2027.

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RBC called Kuehne + Nagel a "high quality and prudently managed company" and expects a return on invested capital above 27% in 2026.

Its debt stands at about 1 times EBITDA, at the bottom end of the sector, though up from a net cash position over much of its history.

RBC expects the company to meet its targeted growth in air and sea freight of 1.5 times global economic growth. Kuehne + Nagel has cited 30 new contracts and 300,000 square metres of warehouse space being set up, and in September announced a long-term strategic collaboration with Amazon, including Amazon Web Services.

The company also sees artificial intelligence lifting the productivity of its office staff by 5%, which it estimates would add CHF 100 million to CHF 150 million by the end of 2027.

RBC forecasts the company's air and sea profit as a share of gross profit reaching 35% by 2030, as targeted, despite the freight rate headwinds it assumes.

RBC's price target implies about 12 times expected 2027 enterprise value to EBITDA, and 25 to 26 times expected 2027 earnings, above a 15-year median of 22 times.

RBC said it could be wrong if growth exceeds the 1.5 times forecast, given the company's momentum with technology customers, or if port congestion or volatility limits how much ship capacity the market can absorb, keeping freight rates higher than it expects.