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On Friday, Citi analyst updated the financial outlook for Avanza Bank Holding AB (AZA:SS), increasing the price target to SEK 400.00 from the previous SEK 330.00 while maintaining a Buy rating on the shares. The adjustment comes as Avanza's shares have demonstrated a 16% increase since the announcement of the full-year 2024 results.
The revised estimates for Avanza Bank factor in expectations for the fiscal year 2027, with a projected EPS growth of approximately 20% for that year, contributing to a 20% hike in the target price. The new earnings per share (EPS) forecasts are approximately 10% higher than the post-results Visible Alpha consensus for FY 2026 and 20% above for FY 2027.
The bullish perspective is largely based on the assumption that net interest income (NII) will exceed consensus estimates by 30-45%. This is predicated on the belief that platform deposits will increase from 4.0% of savings capital to 6.0% by the end of 2026, coupled with an expected decrease in the utilization of savings accounts as savings rates are predicted to drop to 1.6% in 2025.
In terms of valuation, Avanza Bank's stock is currently trading at 16 times the forecasted FY 2027 EPS. The higher price target of SEK 400.00 suggested by Citi implies a valuation of 19 times the anticipated earnings, reinforcing the firm's Buy recommendation.
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