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On Thursday, BofA Securities analyst Tarik El Mejjad upgraded ABN Amro stock from Underperform to Neutral and increased the price target to €22.90 from €14.30. The adjustment reflects a more favorable view on the bank’s potential under new leadership, with expectations centered on the upcoming November Chief Management Director’s (CMD) meeting.
El Mejjad highlighted ABN Amro’s potential to improve cost efficiency, optimize capital, and increase share buybacks. These measures could significantly enhance the bank’s return on tangible equity (ROTE), potentially exceeding 10%. The analyst acknowledged the bank’s clear strategies for growth but also noted the risks associated with executing the plan, including the possibility that short-term performance could deteriorate before improving.
The revised price objective from BofA Securities is based on a reduced cost of equity, now at 11%, and an anticipated 10% rise in net profit for the years 2025 to 2027. Despite the upgrade, BofA Securities is looking for more concrete evidence that ABN Amro can effectively reduce costs, a key factor in boosting ROTE and re-rating its market multiple.
ABN Amro’s valuation is deemed fair by the analyst, trading at 9 times price-to-earnings (P/E) and 0.7 times price-to-tangible book value (P/TBV), with an expected 8% ROTE in 2026 and a 10% dividend yield. The bank’s stock price adjustment and rating change reflect the firm’s cautious optimism about the bank’s future financial performance and strategic initiatives under new management.
In other recent news, RBC Capital Markets has upgraded ABN Amro’s stock rating from Sector Perform to Outperform. This adjustment comes with an increased price target from EUR18.50 to EUR23.00. RBC Capital analysts see potential for the bank’s new management to enhance profitability and reduce share price volatility. They highlighted the incoming CEO’s potential to drive significant improvements and re-rate the bank’s shares. The analysts believe that the new CEO, though not widely known, has the necessary experience to steer the company towards success. RBC Capital’s revised price target reflects their belief in the potential upside for ABN Amro’s shares. The firm’s analysts expressed strong conviction in the effectiveness of the upcoming management actions. These developments could signal a positive shift for ABN Amro as it seeks improved profitability under new leadership.
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