Barclays began coverage of Swiss market expansion services provider DKSH on Tuesday, assigning an "overweight" rating and a target price of CHF 77. That target implies approximately 25% upside from DKSH's closing share price on June 22 of CHF 61.60.
In its initiation note, the brokerage highlighted three core drivers underpinning the call: a turnaround in the Performance Materials division, defensive growth driven by DKSH's heavy exposure to Asia, and acquisition optionality made possible by what Barclays describes as an underleveraged balance sheet.
DKSH earns more than 90% of its revenues from the Asian region, with Thailand identified as the single largest market, accounting for 30% of net sales in 2025. The group positions itself not as a conventional distributor but as a "market expansion services" business that provides end-to-end capabilities spanning sourcing, market entry, commercialization and distribution.
Barclays noted that DKSH's shares have de-rated over the past five years, attributing much of the share-price weakness to troubles in the Performance Materials segment. The broker observed that this weakening tracked similar patterns at peers IMCD and Azelis. Barclays expects DKSH to follow a comparable recovery pathway, which it says should underpin both upgrades to earnings forecasts and a partial re-rating of valuation multiples.
To arrive at its CHF 77 target, Barclays applied a five-year average price-to-earnings multiple of 19 times to its earnings model. The analysts' 2026 adjusted EBIT estimate stands at CHF 375 million, a figure roughly 4% above the Vara consensus. Barclays said this premium is driven chiefly by a roughly 6% higher estimate for the Performance Materials business.
On an earnings-per-share basis, Barclays forecasts adjusted EPS moving from CHF 3.36 in 2025 to CHF 3.82 in 2026, and reaching CHF 4.37 by 2028. These projections imply a compound annual growth rate of 9.2% over the period highlighted by the broker.
Barclays also set out an M&A framework. The bank calculated that DKSH could deploy around CHF 782 million of enterprise value on acquisitions if it shifted from its current net debt-to-EBITDA ratio of 0.5 times to management's stated comfort level of 2 times. Under that leverage move, Barclays estimated a net value creation of CHF 293 million, equivalent to approximately 7.2% of DKSH's market capitalisation, which Barclays places at CHF 4.05 billion.
The initiation note compared DKSH's deal pace from 2021 to 2025 with that of peers. In that period DKSH completed 28 acquisitions and spent about CHF 700 million on deals. By contrast, Barclays cited approximate deal counts of 45 to 50 and spending of roughly CHF 1.60 billion at IMCD and CHF 2.10 billion at Azelis over the same timeframe.
Barclays outlined a valuation range to reflect upside and downside scenarios. The bank's upside case is CHF 102, which applies a 25 times price-to-earnings multiple described as consistent with the peak valuation observed over the past five years. The downside case is CHF 57, based on a 14 times trough multiple.
The broker identified three principal risks to its thesis. First, continued strength in the Swiss franc, which Barclays said has produced an average foreign exchange drag on reported growth of around 4% per annum since 2020. Second, intensifying competition from Chinese suppliers. Third, execution risk in the form of slower or poorly executed mergers and acquisitions.
Overall, Barclays' initiation frames DKSH as a company with regionally defensive revenues, an addressable M&A runway, and the potential for earnings and multiple momentum if the Performance Materials segment rebounds as expected.