Citi Upgrades Kion on Industrial Truck Recovery into 2027; Stock Up 6%

In a Tuesday note, Citi upgraded Kion Group, the German manufacturer of warehouse equipment and forklifts, to Buy from Neutral and raised its price target to €62 from €46. The move follows improving German macroeconomic indicators that point to faster industrial truck demand into 2027, and the stock rallied more than 6% during the session.

According to Citi, the stronger demand outlook, together with continued improvements in Kion's Industrial Trucks & Services division, could drive a re-rating of the company's shares. The bank forecasts sales growth will recover to more than 6% in 2027 — the fastest pace since the COVID pandemic — accompanied by margin expansion.

Citi considers worries about competition from Chinese rivals to be overblown, especially in the premium truck segment. It also said any incremental protectionism by the European Union should alleviate those concerns in a downside scenario.

The brokerage estimates Germany represents more than 30% of sales in Kion's Industrial Trucks & Services division, while Western Europe accounts for more than 70% overall. Citi noted that growth in this business tends to be highly correlated with industrial production due to the widespread use of trucks in material handling.

From 2027, Citi forecasts a recovery to low single-digit percentage growth in new equipment and mid-to-high percentage growth in service revenue, translating to approximately 5% growth for the division as a whole.

Citi made low single-digit upgrades to its forecasts, an increase of less than 1% across the board, but highlighted that its EBIT projections for 2027 and 2028 are already more than 10% above consensus.

With EV/EBITA and EV/sales multiples sitting near cyclical lows, the brokerage sees meaningful re-rating potential. However, it flagged the macro cycle as a key risk given the inherently cyclical character of the industrial truck market.

Kion shares closed at €44.91 on September 7. Citi's target price implies an expected share price return of 38.1% and a total expected return of 40.6%, including a projected dividend yield of 2.6%.