On Monday, Deutsche Bank (ETR:DBKGn) adjusted its outlook on Commerzbank AG (CBK:GR) (OTC: OTC:CRZBY) shares, lowering the price target from EUR 19.00 to EUR 18.00 while reaffirming a Buy rating for the stock.
The revision reflects a cautious stance on the bank's operations due to significant headwinds in Poland and elevated risks in Russia. Despite these challenges, the analyst expects Commerzbank (ETR:CBKG) to maintain robust underlying trends through the second quarter of 2024.
The analyst anticipates that Commerzbank will continue to benefit from a high net interest income and a faster pace in fee income growth. Additionally, manageable cost inflation and stable asset quality are likely to support the bank's performance. However, the impact of the Polish and Russian markets has led to a reduction in the estimates for 2024 and 2025, resulting in a lower price target.
While the near-term outlook has necessitated a downward revision, Deutsche Bank has upgraded its forecasts for Commerzbank for the years 2026 and 2027. The revised outlook is based on expectations of a higher total payout, with a greater emphasis on share buybacks and increased fee revenues.
Commerzbank's current valuation, trading at 5.6 times estimated earnings per share and 0.53 times tangible book value for an expected return on tangible equity of 10% in 2025, coupled with a projected annual capital return in the low to mid-teens, underpins Deutsche Bank's continued recommendation of the stock as a Buy and a top pick.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.