Goldman Sachs Downgrades Schindler to 'Sell' on China Woes and Weak Growth Outlook

Goldman Sachs has downgraded elevator manufacturer Schindler Holding to “Sell” from “Neutral,” citing a lack of positive catalysts and mounting headwinds from China and developed markets. The bank also significantly cut its 12-month price target for the company's stock to 233 Swiss francs from a previous 286 Swiss francs.

Rationale for the Downgrade

In a note to clients, Goldman Sachs analysts outlined several factors behind the more pessimistic outlook, a reversal from their upgrade to Neutral in April. The expected stabilization in China has not materialized; instead, property market metrics have continued to deteriorate. The bank also noted that the interest rate environment in developed markets remains more uncertain than previously anticipated.

The “Sell” thesis is based on three core arguments:

• Slower Growth: Schindler is expected to see lower growth and earnings progression than the broader sector due to delayed interest rate cuts and sustained weakness in China's property market, specifically in new construction starts.
• Competitive Pressures: The company has been losing market share to peers, according to the report. Muted pricing power and rising raw material costs are also expected to pressure margins, resulting in an earnings-per-share compound annual growth rate (CAGR) that is among the lowest in the sector.
• Valuation Concerns: While not expensive on all metrics, Goldman Sachs finds Schindler's stock trades above its peers on an EV/sales-to-margin and price/earnings-to-growth basis.

Revised Financial Estimates

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Reflecting these concerns, Goldman Sachs has lowered its financial forecasts for Schindler. The bank cut its sales estimates by 2% for 2026 and 1% for 2027, citing weaker organic growth and foreign exchange headwinds. This led to a 3% reduction in adjusted EBIT estimates for 2026 and a 5% cut for 2027, placing Goldman's forecasts 1% to 2% below the Visible Alpha consensus.

Adding to the uncertainty, Schindler has postponed its Capital Markets Day, originally scheduled for June, to November 19. The company's stock has underperformed so far this year, falling 14% year-to-date as of the report's timing.

Market Impact and Risks

The new price target of 233 Swiss francs implies a potential downside of 10.6% from the stock's closing price on September 4. While the bank's base case is negative, it cited several upside risks that could challenge the “Sell” rating. These include better-than-expected demand, stronger pricing power, faster-than-anticipated cost savings from internal programs, or higher cash returns to shareholders.