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On Monday, Citi analysts adjusted their stance on DWS Group GmbH & Co KGaA (DWS:GR), downgrading the stock from Buy to Neutral, while raising the price target to €49.50 from the previous €44.70. The revision followed the company’s fourth-quarter 2024 results, which suggested a robust growth outlook.
The firm’s targets indicate approximately 10% potential upside to both Citi’s and the consensus estimates over the medium term. While acknowledging the attractiveness of the growth prospects, Citi analysts expressed caution in fully crediting the anticipated upside at this stage. They noted that much of the potential gains could come from performance or transaction fees and other income. This perspective comes in light of the analysts’ previous emphasis on the inflows to DWS Group’s passive and alternative investment products.
Despite a positive view on DWS Group’s growth narrative, Citi anticipates limited short-term catalysts to further propel the stock upward. Over the last three months and the past year, DWS shares have seen an appreciation of over 20%. The stock is currently trading at around 10.5 times the two-year forward price-to-earnings ratio, which is approximately 10% higher than its European traditional asset management peers. These peers have maintained flat valuations during the same period.
The updated price target implies that DWS stock is no longer seen as significantly undervalued by Citi. With consensus estimates expected to be updated soon, the analysts predict only limited upside to these figures. As a result, they have opted for a more conservative rating until there are clearer indicators of the company’s performance and fee income trajectory.
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