Goldman Sachs downgrades Schindler on weak growth, China headwinds

Goldman Sachs moved Schindler Holding to a “sell” recommendation from “neutral” on Monday, arguing that the elevator manufacturer has limited catalysts to keep pace with its sector over the next several years. The bank also suggested that recent industry consolidation deals may lead Schindler to avoid handing back extra cash to shareholders beyond the commitments it has already made.

Goldman Sachs reduced its 12-month price target on Schindler to CHF 233 from CHF 286, representing a potential 10.6% decline from the September 4 close of CHF 260.60.

In April, Goldman Sachs analysts had lifted Schindler to Neutral, anticipating stabilization in China and pointing to possible additional shareholder cash returns as a catalyst ahead of the Capital Markets Day initially scheduled for June 3.

Since then, Schindler shares have lagged the market, dropping 14% year-to-date, while key indicators in China kept weakening and the interest-rate outlook in developed markets stayed more unpredictable than anticipated, the analysts noted. Schindler has also rescheduled its Capital Markets Day to November 19.

The bearish case is built on three pillars. First, the company is likely to experience slower growth and earnings advancement relative to the broader sector, reflecting postponed anticipated rate cuts in developed markets and sustained softness in Chinese gross floor area starts during the past two years.

Second, Schindler has been expanding at a slower pace than its industry, as rivals capture market share and pricing signals suggest persistent subdued pricing; meanwhile, the overall raw material cost mix has turned into a greater obstacle.

Consequently, Schindler’s compounded annual growth rate for earnings per share now ranks near the bottom of its sector, according to the analysts.

Third, although Schindler does not appear costly relative to peers when measured by enterprise value to invested capital against return on invested capital and weighted average cost of capital, it trades at premiums to the sector on enterprise value to sales relative to margin and on price/earnings-to-growth. The shares also stand above their own historical EV/IC to ROIC/WACC ratio.

Goldman Sachs trimmed its sales projections by 2% for 2026 and 1% for 2027, pointing to softer-than-expected organic revenue growth, currency drags and ongoing China weakness. As a result, adjusted EBIT forecasts were reduced by 3% for 2026 and 5% for 2027, leaving the bank’s estimates 1% to 2% below Visible Alpha Consensus Data.

The analysts identified several upside risks: demand could prove stronger than expected, pricing power might be more robust or raw material pressures lighter, cost savings from internal efficiency initiatives could arrive sooner, shareholder cash returns could exceed forecasts, and capital rotation out of AI-related equity baskets might accelerate.

Goldman Sachs also disclosed that it anticipates receiving or pursuing compensation for investment banking services from Schindler Holding over the next three months, and that it has maintained investment banking and other client relationships with the company during the past 12 months.