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Deutsche Post Raises Outlook, Shares Gain About 3%

Deutsche Post, the world’s largest courier company, raised their mid-term targets after record earnings for 2020 as world trade is likely to recover further during 2021, leading to increased volumes in global logistic activities, sending its shares up about 3% on Tuesday.

For the financial year 2021, the Group anticipates a further significant increase in EBIT to more than EUR 5.6 billion, an improvement to more than EUR 6.0 billion planned for 2023. This guidance is based on the assumption that e-commerce will continue to grow in the current year from a structurally higher starting point, while growth rates should normalize in the course of the year, the company said in the statement.

Bonn, Germany-based courier company plans to generate cumulative free cash flow of EUR 7.5 to 8.5 billion between 2021 and 2023 (previous forecast for 2020 to 2022: more than EUR 6 billion). Cumulative capital expenditure (capex) in the period from 2021 to 2023 is expected to be between EUR 9.5 and 10.5 billion (previous forecast for 2020 to 2022: around EUR 9.5 billion).

Deutsche Post this year’s revenue surged over 5% to 66.8 billion euros, slightly missing Wall Street consensus estimates of 67 billion.

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At the time of writing, Deutsche Post shares, which rose 19% in 2020 and added another 10% so far this year, traded about 3% higher at EUR 44.49 on Tuesday.

Executive Comments

“2020 was an exceptionally challenging year for Deutsche Post DHL Group. Our services were in demand more than ever. We not only posted record earnings, but also created 20,000 new jobs worldwide. We focused on our profitable core logistics businesses by consistently aligning our company towards e-commerce and investing in our logistics network and digitalization,” said Frank Appel, CEO of Deutsche Post DHL Group.

“This way we are strengthening our profitability and our resilience against global economic turbulence. Deutsche Post DHL Group is thus well positioned to continue growing profitably in the coming years.”

Deutsche Post Stock Price Forecast

Fifteen analysts who offered stock ratings for Deutsche Post in the last three months forecast the average price in 12 months of €48.12 with a high forecast of €58.00 and a low forecast of €37.50.

The average price target represents an 11.48% increase from the last price of €43.17. Of those 15 analysts, 12 rated “Buy”, three rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of €37.5 with a high of €51.5 under a bull scenario and €21 under the worst-case scenario. The firm gave an “Overweight” rating on the German multinational package delivery company’s stock.

Several other analysts have also updated their stock outlook. Deutsche Post has been given a €52.00 target price by investment analysts at Barclays. The brokerage currently has a “buy” rating on the stock. Warburg Research set a €40 price target and gave the stock a “neutral” rating. Kepler Capital Markets set a €38 price objective and gave the stock a “neutral” rating.

Moreover, the Goldman Sachs Group set a €58 target price and gave the company a “buy” rating. Sanford C. Bernstein set a €50 price target on shares of Deutsche Post and gave the company a “buy” rating. UBS Group set a €48 price target and gave the company a “buy” rating.

Analyst Comments

“We think DPDHL results (pre-announced), upped 2021 guidance and medium-term targets (2023) came in line with expectations. We expect a neutral share reaction to results,” said Carolina Dores, senior equity analyst at Morgan Stanley.

DPDHL upped 2021 EBIT guidance to ‘above €5.6bn’ (in line with Bloomberg consensus) and above previous guidance of ‘above €5.42bn’). The higher guidance is driven by resilient B2C growth, good start of air freight. Capex of €3.4bn is broadly in line with consensus at €3.5bn and free cash flow of €2.3bn is also broadly in line with expectations. FCF decreased €0.2bn yoy despite an improvement in EBIT of c€0.2bn due to higher annual capex.”

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This article was originally posted on FX Empire

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