S&P 500 slips as weaker services data stoke fresh economic concerns
On Monday, Citi analysts adjusted their stance on Julius Baer Group Ltd . (BAER:SW) (OTC: OTC:JBAXY), downgrading the private banking group’s stock from "Buy" to "Neutral," while also lowering the price target from CHF67.00 to CHF60.00. The revision followed a meeting with the firm’s new CEO, Stefan Bollinger, and CFO, Evie Kostakis, which left the analysts with a mixed outlook.
Citi’s analysts acknowledged a more positive view on Julius Baer (SIX:BAER)’s cost outlook, noting lower inflation than initially feared and manageable changes to the risk framework. However, they expressed concerns about the extent of the expected organizational restructuring and cultural shift under the new leadership, which could present challenges, including potential drag from Relationship Manager (RM) attrition.
Despite these concerns, Citi still sees reasons for Julius Baer stock to perform well over the medium-term. The analysts highlighted that their lowered near-term estimates are based on anticipated lower growth and margins. The reduction in the price target to CHF60 reflects these adjustments and aligns with a less than 15% expected total return (ETR), as well as limited upside to consensus estimates.
The valuation of Julius Baer stock now stands at only a slight discount to its historical two-year forward Price-to-Earnings ratio, excluding surplus capital. This valuation, coupled with the potential challenges outlined by Citi, has led to the decision to downgrade the rating to "Neutral" from "Buy."
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