Goldman Sachs Downgrades Schindler on Weak Growth and China Headwinds

Goldman Sachs has downgraded its rating for Schindler Holding to 'sell' from 'neutral', citing weak growth and China headwinds as key concerns. The broker also cut its 12-month price target to 233 Swiss francs from 286 Swiss francs, implying a 10.6% downside from the September 4 closing price of 260.60 Swiss francs.

The downgrade comes after Schindler has underperformed year-to-date, falling 14%, while China's metrics continued to deteriorate and developed-market interest rate environment remained more uncertain than expected. Goldman Sachs analysts previously upgraded Schindler to 'neutral' in April, expecting China to stabilize and flagging potential additional cash returns to shareholders as a catalyst.

The 'sell' thesis rests on three factors: lower growth and earnings progression than the sector, continued weakness in China gross floor area starts over the past two years, and Schindler's slower growth compared to its peers. The company trades above the sector on certain valuation metrics and has been growing more slowly than the industry.