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Investing.com - BNP Paribas SA (EPA:BNP) (OTC:BNPQY) has been downgraded by Barclays from Overweight to Equalweight, with its price target reduced to EUR80.00 from EUR94.00.
The downgrade comes despite BNP Paribas trading at the lowest price-to-earnings 2026 multiple in the sector at 6.0x compared to the median bank at 9.0x, and despite the bank’s market capitalization having declined by $9.6 billion over two days, underperforming the SX7P index by 10%.
Barclays forecasts BNP Paribas’ earnings growth to accelerate, with year-over-year reported EPS growth of 17% expected in H2-25 and 12% in each of fiscal years 2026 and 2027, along with a Q3 CET1 ratio slightly ahead of consensus.
The downgrade primarily stems from "overhang and uncertainty" related to ongoing Sudan litigation, which Barclays believes will prevent a multiple re-rating despite positive earnings acceleration and organic capital generation.
Barclays noted the appeal process could take approximately eight months, creating prolonged uncertainty, and has increased its cost of equity assumption to 15.9% from 13.6% to reflect the litigation risk while maintaining unchanged earnings and capital forecasts.
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