Classification of Quirin Privatbank Kapitalmarktgeschäft to Deutz AG

Company Name:	Deutz AG
ISIN:	DE0006305006
Reason for the research:	update
Recommendation:	Buy
from:	30.03.2026
Target price:	12.00
Last rating change:
Analyst:	Klaus Soer

Strategic diversification into growth segments drives profits and margins

DEZ presented a great set of results on the remarkable operational performance in FY25. Despite a challenging macroeconomic environment, DEZ was able to perform a strong and high FY25 adj. EBIT result (EUR 112m, +46%, adj. margin of 5.5% vs. 4.2% FY24). This includes an underlying margin expansion of the core classic engine segment to 7%. The most recent acquisitions of Sobek (defense, drone components), Blue star power systems (gensets, energy infrastructure) and several acquisitions in the highly profitable service business are paying off. The newly acquired operations are contributing largely to the growth in sales, profits and especially margins. The strategic shift towards value enhancing new business fields like defense and energy infrastructure will reduce the dependence on the cyclical and economic sensitive classical engine business and provides a great platform for further growth. DEZ had obviously already a great start into the new FY 26e. Based on trading statements and the current strong order backlog we anticipate growth in H1/26 in all business units. The sales and earnings momentum in FY26 will be supported by the most recent acquisition Frerk in the energy segment. While all business segments will show growth momentum, the strongest increase might be seen in the service and the energy segment. Even the cyclical and economic sensitive classical engine segment might recover from recent lows supported by higher demand in important distribution industries like agriculture and construction machinery. In total we expect DEZ FY26e group sales to grow by 19.4% to EUR 2,440m. Due to the growing proportion of margin enhancing operations FY26e adj. EBIT should grow by 50.3% to EUR 169m (adj. EBIT margin 6.9%). Given the strong balance sheet structure with an equity ratio of more than 50% and a low financial leverage we expect the current management to continue its opportunistic M&A strategy in FY 26. Focus might be a strengthening of the defense and/or the energy operations. Also further investments into the global service network of DEZ are likely. We have adjusted our model on DEZ to the new growth perspectives and including the most recent acquisitions. DEZ stock currently trades with a significant discount to both its international peers and vs. our DCF model which includes the long-term perspective to a better extent. We stick to our Buy Rec. and increase the TP to EUR 12,00 (prev. EUR 10.00).

 

You can download the research here: DEUTZ_AG_20260326
For additional information visit our website: https://research.quirinprivatbank.de/

Contact for questions:
Quirin Privatbank AG
Institutionelles Research
Schillerstraße 20
60313 Frankfurt am Main
research@quirinprivatbank.de
https://research.quirinprivatbank.de/