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On Wednesday, Deutsche Bank (ETR:DBKGn) raised the price target for BAWAG (VIE:BAWG) Group AG (BG:AV) (OTC: BWAGF) to EUR100 from the previous EUR80, while maintaining a Buy rating on the stock. The adjustment follows the inclusion of the anticipated financial impact from the integration of Knab and the acquisition of Barclays (LON:BARC) Consumer Bank Europe into the bank's financial model.
According to the analysis, the integration of Knab is expected to contribute more than EUR 160 million to BAWAG's pre-tax profit, which is estimated to enhance earnings per share (EPS) by about 18% based on projections for 2026. The analyst pointed out that the majority of this increase is likely to come from net interest income, along with cost synergies that are expected to materialize over time.
Furthermore, the acquisition of Barclays Consumer Bank Europe is projected to add an additional EUR 100 million plus to BAWAG's pre-tax profit by 2027. These strategic moves are seen as significant drivers of future earnings for the bank.
During the upcoming Capital Markets Day, more detailed guidance is anticipated regarding the impact of both transactions. Additionally, Deutsche Bank expects an announcement of a EUR 200 million share buyback program, which could provide further support to the stock.
The optimistic outlook is underpinned by the substantial EPS accretion that is foreseen, prompting Deutsche Bank to reiterate their buy rating. BAWAG's stock is currently trading at 7.4 times the estimated 2026 earnings per share, which the analyst suggests offers an attractive valuation for investors.
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