Jefferies Upgrades Dormakaba to 'Buy' on Margin Expansion and US Growth Prospects

Jefferies has upgraded Swiss access-solutions maker Dormakaba Holding AG (SIX:DOKA) to "Buy" from "Hold," citing a compelling valuation and significant scope for margin expansion. The investment bank raised its price target to CHF 82 from CHF 70, which implies a potential 34% upside from the stock's Sept. 25 closing price of CHF 61.30.

Margin and Valuation Catalysts

The upgrade is anchored in Jefferies' expectation that Dormakaba's adjusted EBITDA margins will climb to approximately 18% by fiscal 2028/29, which is 80 basis points above the market consensus. This forecast is supported by the company's recent performance, including a record adjusted EBITDA margin of 16.1% in fiscal 2025/26, driven by a successful restructuring program that delivered CHF 235 million in savings, well above its CHF 170 million target.

According to the brokerage, Dormakaba's shares are trading at a significant discount. The stock is valued at about 14 times its estimated 2026 enterprise value to adjusted EBITA (EV/EBITA), which is approximately 20% below its long-term average multiple of 17.8 times.

Strategic Drivers and Outlook

Growth in North America, which accounts for about 30% of the company's exposure, remains a key driver for the positive outlook. Jefferies forecasts organic growth in the region to reach 8% in fiscal 2027/28. The bank's estimates project U.S. and Canada sales reaching CHF 852 million by fiscal 2028/29, excluding any potential acquisitions.

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A proposed simplification of the company's ownership structure is another potential positive catalyst. The plan involves the Mankel family exchanging its 47.5% stake in the operating company for newly issued shares in the listed entity. Jefferies estimates this could create about CHF 2 billion in capital contribution reserves, which could potentially be distributed to shareholders without incurring Swiss withholding tax.

Key Data and Risks

Investors will be watching for potential updates at the company's upcoming Capital Markets Day on Nov. 18. Key financial details from the Jefferies note include:

• Bull-case Price Target: CHF 104
• Bear-case Price Target: CHF 45
• FY 2025/26 Revenue: CHF 2.79 billion, with 3.0% organic growth.
• Ownership Vote: Shareholders will vote on the new structure at the annual general meeting on Oct. 20.

The primary risk to the investment thesis is execution, particularly if the U.S. growth strategy takes longer than anticipated to deliver results. Jefferies cautioned that while the U.S. business recovered in the second half of fiscal 2025/26, one strong half-year does not definitively establish a long-term trend.