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UBS Undervalued; trading 13% below Trefis Fair Value Estimate

Published 2023-04-04, 01:45 p/m

By Ketki Saxena 

Investing.com -- UBS stock has been performing well despite the challenging economic environment and its deal to acquire Credit Suisse (SIX:CSGN) for $3.2 billion as part of Swiss regulators' efforts to rescue Credit Suisse from its liquidity issues.. Its stock (NYSE: UBS) gained 14% YTD, outpacing the S&P500's increase of 7%. At $20 per share, it is currently trading at a discount to its fair value estimate of $23 by Trefis.

Despite an overall decline in total revenues by 8% YoY in Q4 2022 due to lower investment bank and asset management revenues, personal & corporate banking revenues grew by 5%, driven by higher net interest income. Noninterest expenses also decreased by 13% YoY leading to an adjusted net income increase of 23% YoY at $1.65 billion.

In FY2022, UBS saw a marginal decrease in net revenue at $34.56 billion with wealth management and investment bank units facing declines while asset management and personal & corporate banking seeing increases. Operating expenses were reduced by 4%, improving adjusted net income growth of just over two percent year-over-year at $7.63 billion.

Looking ahead into FY2023, UBS is expected to maintain revenue levels around last year's figures while keeping their adjusted net income margin steady as well resulting in an annual GAAP EPS projection of approximately $2.32 coupled with a P/E multiple of just below 10x will lead to a valuation of $23.
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