Goldman adopts a neutral stance on Schindler: Investors seek evidence of sustainable and profitable expansion

Schindler’s 2025 Results: Market Skepticism Despite Operational Recovery

Schindler’s 2025 financial update was met with a sharp sell-off, as investors responded with a clear “sell the news” reaction. Although the company reported a solid operational rebound—achieving an EBIT margin of 12.6% and a net profit of CHF 1.073 billion—its shares dropped more than 8% following the February announcement. This response underscores a key disconnect: the recovery had already been anticipated by the market, shifting attention to what comes next.

Schindler’s leadership acknowledged this transition. CEO Paolo Compagna made it clear that 2025 would be the final year of the company’s operational recovery, with the focus turning to “profitable growth” in 2026. Yet, while profitability improved, investors were disappointed by the lack of momentum in revenue and orders. Revenue in local currencies grew by just 1.3%, but in absolute terms, it declined 2.2% to CHF 10,947 million, and order intake fell 4.1% to CHF 11,313 million. For those hoping for a stronger growth story, these figures fell short.

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This setup highlights the current tension in Schindler’s outlook. Goldman Sachs’ neutral rating suggests that the benefits of the recovery program are already reflected in the share price. The real challenge now is whether the company can deliver on its ambitious “profitable growth” targets for 2026, including a 13% EBIT margin and low- to mid-single-digit revenue growth. Any failure to meet these elevated expectations could prompt another market correction. For now, investors are demanding evidence, not just promises, of future growth.

Goldman Sachs: What Drives “Improving Growth”

Goldman’s neutral view signals that Schindler’s operational turnaround has already been factored into the stock price. The firm emphasizes that the current valuation reflects anticipated productivity gains necessary to match industry peers. In short, the easy margin improvements from the recovery phase are no longer a hidden advantage—they’re already priced in.

Goldman identifies ongoing margin expansion as the main driver of “improving growth.” For 2025, Schindler posted an EBIT margin of 12.6% and an adjusted margin of 13.3%. The company’s ability to control costs and boost its gross profit margin—demonstrated by a robust 42.31% gross margin—is seen as the foundation for future profitability.

However, the market remains wary of structural challenges. Goldman points to ongoing difficulties in China, where the property sector downturn has led to a slump in new construction. Schindler expects continued weakness in its Chinese new installations segment, a crucial area for growth. Additionally, the company anticipates a delayed recovery in the construction industries of Europe and the U.S., which could further hinder its ability to reach 2026 targets.

Ultimately, there’s a disconnect in timeframes: Goldman’s “improving growth” is a short-term story based on efficiency, while the market is concerned about longer-term growth obstacles. For Schindler’s shares to climb, the company must not only sustain high margins but also prove it can overcome these headwinds and deliver on its revenue promises. Until then, the gap in expectations persists.

2026 Outlook: Conservative Guidance or Underpromise?

Schindler’s 2026 revenue forecast of low- to mid-single-digit growth in local currencies sets a cautious tone. After a modest 1.3% revenue increase in 2025, this target represents only a slight acceleration. Many investors had hoped for a more robust rebound following the operational recovery, so this guidance may be viewed as a conservative reset rather than an ambitious leap.

The company expects a partial recovery in new installations across key markets to offset ongoing challenges, particularly in China, where new installations dropped by over 10% last year. This outlook acknowledges that while some growth drivers may rebound, significant structural issues remain. For the stock to rally, Schindler will need to outperform these modest expectations and show that the recovery in new installations is broader and stronger than projected.

The risk is that the market’s internal expectations for 2026 were higher, especially after a strong finish in the Americas and Asia Pacific. By setting a relatively low bar, Schindler may be aiming to “beat and raise” later. However, this conservative approach also signals caution due to uncertainties like volatile commodity prices, restructuring costs, and market pressures. If the guidance is seen as too low, the stock could face further selling; if Schindler exceeds these targets, it could regain momentum. For now, the company is taking a careful, rather than bold, approach.

Valuation and Potential Catalysts: What Could Bridge the Gap?

Schindler’s current valuation reflects high expectations, leaving little room for disappointment. Goldman’s downgrade to ‘neutral’ is a direct result of this. The firm notes that the stock’s strong performance year-to-date limits further upside unless growth accelerates. With a P/E ratio of 32.57, the market is already pricing in a successful recovery and sustained profitability. For shares to move higher, Schindler must deliver on its “profitable growth” narrative—a story the market has yet to fully embrace.

The next major catalyst is the Capital Markets Day on June 3, 2026, where the company is expected to provide more detailed long-term plans. This event could either help close the expectation gap or widen it further. A convincing strategy for accelerating revenue growth could justify the premium valuation, while vague or overly cautious messaging could reinforce skepticism and prompt another sell-off.

Structural risks remain the biggest concern. Goldman Sachs specifically highlights ongoing declines in China’s original equipment market as a significant headwind. Last year, Schindler’s new installations in China shrank by more than 10%. Even with margin improvements, persistent weakness in this key market could limit top-line growth. Delays in construction recoveries in Europe and the U.S. add to the challenge.

In summary, Schindler’s shares are priced for perfection. The high valuation reflects the operational turnaround, but the upcoming Capital Markets Day will be the true test of whether the company can deliver the growth needed to justify its price. Until then, the expectation gap remains wide, and the stock’s upside is constrained by the high bar it must clear.

Key Takeaways: Navigating Expectation Gaps

The market’s response to Schindler’s results makes clear where expectations stand. The 8% share price drop following improved profitability shows that the operational recovery was already anticipated. Investors were more concerned with declining revenue and weak order intake, signaling a pause in growth momentum. This is a classic “sell the news” scenario: profitability was expected, but the growth outlook fell short.

Now, the focus is shifting. There is growing recognition of Schindler’s improved profitability, as reflected in recent analyst upgrades such as AlphaValue/Baader Europe’s move to ‘Add.’ However, this positive sentiment is set against a valuation that leaves little margin for error. With a P/E ratio of 32.57, investors are paying a premium for the promise of “profitable growth.”

The real opportunity—and risk—lies in the gap between what’s already priced in and what remains uncertain. Operational improvements are reflected in the stock, but the growth narrative is still unproven. Schindler’s 2026 guidance is cautious, and structural headwinds in China and other key markets are real. For the stock to move higher, the company must not only meet its targets but also show that growth is recovering more strongly than its guidance suggests. Until then, the high valuation will keep the shares sensitive to any sign that the growth story is faltering.