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On Thursday, CFRA analyst Firdaus Ibrahim updated the firm’s outlook on Deutsche Bank (NYSE:DB), increasing the 12-month price target from $16.00 to $17.00 while maintaining a Sell rating on the bank’s shares. Currently trading at $19.75 with a market capitalization of $38.33 billion, the stock’s P/B ratio stands at 0.49, below the peer average of 0.90 times. This valuation is based on Deutsche Bank’s weaker return on equity (ROE) profile compared to its peers. According to InvestingPro analysis, the stock appears slightly overvalued at current levels, with technical indicators suggesting overbought conditions.
Ibrahim has kept the 2025 earnings per share (EPS) forecast for Deutsche Bank at €2.45 and introduced a 2026 EPS estimate of €2.70. The bank’s pre-tax profit for Q4 2024 was reported at €583 million, a 17% decline year-over-year and below the consensus estimate of €945 million. The lower profits were significantly affected by exceptional operating expenses totaling €235 million, primarily due to real estate charges and adjustments for UK bank levies. InvestingPro data reveals that two analysts have recently revised their earnings estimates downward for the upcoming period.
Despite these challenges, Deutsche Bank saw its net revenues increase by 9% year-over-year to €7.2 billion, with the Investment Bank segment showing a notable 30% growth. However, the Corporate Bank and Private Bank segments did not perform as well, with revenues falling by 2% and 1%, respectively. The bank faces difficulties in growing revenues in these areas, especially in light of anticipated interest rate cuts.
In response to these revenue challenges and planned investments, Deutsche Bank has revised its 2025 cost/income ratio target to below 65%, up from the initial target of 62.5%. This adjustment underscores the near-term obstacles the bank may face in narrowing its profitability gap with competitors.
In other recent news, Deutsche Bank Securities Inc., a Deutsche Bank AG subsidiary, has settled a $4 million penalty with the Securities and Exchange Commission (SEC). The penalty is due to late filings of Suspicious Activity Reports (SARs), a regulatory requirement under the U.S Department of the Treasury’s Financial Crimes Enforcement Network. From April 2019 to March 2024, Deutsche Bank Securities was found to have delayed or not completed SARs investigations in a timely manner, including two instances where filings took over two years. The company has accepted a censure, a cease-and-desist order, and the penalty without admitting or denying the SEC’s findings.
On the other hand, Deutsche Bank recently downgraded AJ Bell from Buy to Hold, despite the stock hitting its price target following a 60% rally. The bank adjusted its earnings per share forecasts for AJ Bell upwards after the company’s recent financial results. Deutsche Bank’s decision is based on the belief that AJ Bell’s current share price fully reflects the company’s near-term prospects, despite the potential for long-term growth. These are among the recent developments for both Deutsche Bank and AJ Bell.
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