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On Thursday, Deutsche Bank (ETR:DBKGn) analysts showed confidence in Commerzbank AG (CBK:GR) (OTC:CRZBY), raising the price target on the bank’s shares to €26.00, up from the previous €22.00. The firm maintained its Buy rating on the stock. The move reflects the bank’s resilience during the recent sell-off in the banking sector, which Commerzbank (ETR:CBKG) weathered better than in past financial downturns.
Analysts at Deutsche Bank credited Commerzbank’s robust performance to several factors, including higher and more stable profitability, strategic exposure to German infrastructure and defense spending, and effective takeover defenses. These elements have contributed to the bank’s newfound resilience.
The German government’s stimulus measures were highlighted as a potential significant boost, particularly to Commerzbank’s Corporate Clients segment. The stimulus is expected to provide upside to volume growth targets and support the bank’s ambitious fee income guidance. Despite this positive outlook, Deutsche Bank slightly trimmed its earnings per share (EPS) estimates for Commerzbank due to falling interest rate forecasts.
The updated forecasts by Deutsche Bank suggest that Commerzbank’s stock is trading at seven times its projected EPS and offers a 14% total yield. The stock is also valued at 0.8 times its tangible book value, with an expected return on tangible equity (ROTE) of 12% by 2027. The maintenance of the Buy rating indicates the analysts’ continued endorsement of the stock to investors.
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