Commerzbank stock rating downgraded to Hold by Deutsche Bank on valuation

Investing.com - Deutsche Bank downgraded Commerzbank AG (ETR:CBK) (OTC:CRZBY) from Buy to Hold on Monday, while raising its price target to EUR35.00 from EUR33.00. The bank, currently valued at $47.58 billion, has seen its shares surge with a remarkable 174% gain year-to-date.

The German bank cited valuation concerns following Commerzbank’s share price tripling over the past year, which has resulted in the stock trading at a 20% to 42% price-to-earnings premium compared to the sector. According to InvestingPro data, the stock’s technical indicators suggest it’s in overbought territory, with a current P/E ratio of 17.32x.

Deutsche Bank analyst Benjamin Goy maintained a positive view on Commerzbank’s fundamental story, highlighting its rising profitability, capital return potential, and expected benefits from German fiscal stimulus. This outlook aligns with the bank’s solid 10.42% revenue growth and positive earnings forecasts identified by InvestingPro analysts.

The downgrade comes after Deutsche Bank maintained a Buy rating on Commerzbank for more than 3.5 years, with the analyst acknowledging several less valuation-sensitive buyers in the market, including Germany baskets and derivatives conversion, with share buybacks expected to join soon.

Based on Deutsche Bank’s updated 2027 forecasts, Commerzbank trades at 10 times earnings, 1.3 times tangible book value, with a 10% total yield for an expected return on tangible common equity of 13.5%.

In other recent news, Commerzbank has experienced a change in its stock rating. BofA Securities downgraded Commerzbank from a Buy to a Neutral rating. Despite the downgrade, BofA Securities raised the price target for Commerzbank to EUR31.70 from EUR30.00. The adjustment reflects BofA Securities’ view that the bank’s shares have reached a fair valuation. The bank’s shares have seen significant growth, with a 91% increase year-to-date. BofA Securities’ analysis indicates a valuation based on a 9x price-to-earnings ratio and a 1.1x price-to-tangible book value for an estimated 12.5% return on tangible equity by 2026. These developments provide investors with insights into the current evaluation of Commerzbank by financial analysts.

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