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On Monday, Barclays (LON:BARC) made an adjustment to Nordea Bank Abp’s (NDA:SS) (OTC:NRDBY) stock rating, downgrading it from Overweight to Equalweight, though the firm increased the price target from EUR11.80 to EUR13.40. Namita Samtani of Barclays cited a modestly higher expectation for earnings per share (EPS) compared to the consensus for fiscal years 2025 to 2027, but sees limited upside given the stock’s current valuation.
The bank’s stock now has a price-to-tangible-book-value (PTBV) ratio of 1.5 times based on Barclays’ estimates. This valuation is at a premium compared to other Nordic banks, leading the analysts to suggest that investors might find more attractive investment opportunities within the region’s banking sector.
Barclays’ decision to adjust its EPS estimates for Nordea reflects a nuanced view of the bank’s financial prospects. For fiscal years 2026 and 2027, the EPS estimates were reduced by 2-3% due to anticipated higher expenses. Conversely, the estimate for fiscal year 2025 was increased by 1% on the back of improved fee income expectations.
The increase in the price target to EUR13.40 from EUR11.80 is attributed to a lowered cost of equity assumption, which Barclays now sets at 9.5%, aligning it with the cost of equity for other Nordic banks and down from the previous 10.8%. This adjustment reflects a change in the risk profile associated with Nordea in comparison to its peers.
Barclays’ new rating and price target for Nordea Bank Abp reflect a recalibration of the bank’s future earnings potential and its position within the Nordic banking landscape. The report suggests a more cautious outlook on Nordea’s stock, recommending an Equalweight stance as the bank’s shares are currently trading at a premium valuation.
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