First Berlin Equity Research has published a research update on PSI SE (ISIN: DE000A0Z1JH9). Analyst Simon Scholes downgraded the stock to ADD and decreased the price target from EUR 28.00 to EUR 26.00.

Abstract
Last week PSI held a capital markets day in Frankfurt. The meeting centred on the plans of the new CEO, Robert Klaffus (joined PSI on 1 November last year), to boost sales growth and profitability following three tumultuous years scarred by the Ukraine war (2022), cost overruns on Redispatch projects (2022 and 2023) and a cyberattack on the company’s operations (February 2024). Mr Klaffus announced 2028 targets entailing sales of €400m-€440m (2023-2028 CAGR of 8%-10%), raising the group EBIT margin to 14%-16% and generating EPS of €2.80. The sales growth plan is based entirely on organic growth. Levers that the company intends to pull to reach these targets are better pricing, industrial AI at the strategic core of the entire portfolio, scaling of SaaS products, and international growth in central Eastern Europe and North American markets. PSI’s targets are not far from our 2028 sales and EBIT margin forecasts (€396m and 13.2% respectively), which we have left unchanged. Management have indicated that reaching their targets will require higher investment than we had previously modelled. The debt/equity ratio is expected to move in the range 1.7-2.0 compared with an average of 1.5 for the five-year period 2019-2023. We had previously forecast an average debt/equity ratio of 1.68 for 2024-28. We have now raised this figure to 1.85. The corresponding incremental investment causes us to lower our price target from €28 to €26 and the recommendation from Buy to Add.