BofA update shows where active managers are putting money
Investing.com - Keefe, Bruyette & Woods (KBW) has reiterated its Outperform rating on Erste Group Bank (EBS:AV) (OTC:EBKDY) with a new price target of €87, representing the highest target on Wall Street.
KBW highlighted Erste’s strategic entry into Poland, the largest banking sector in Central and Eastern Europe (CEE), through its acquisition of Santander (BME:SAN) Polska. The firm noted this acquisition fills "the missing link in the chain" for Erste, which had established presence in other CEE markets during the late 1990s and early 2000s.
The research firm expressed optimism about Erste’s growth prospects following its analysis of whether the bank "acquired the right Polish asset" and if this acquisition might impact growth across its wider business operations.
KBW expects Erste to deliver a return on tangible equity exceeding 19% by 2027, with growth rates surpassing the broader banking sector. The firm characterized Erste’s current valuation as "too cheap" at approximately 7.1x projected 2027 price-to-earnings.
The new €87 price target values Erste at approximately 8.5x 2027 estimated earnings and 1.3x 2027 estimated tangible net asset value, which KBW described as "undemanding" given the bank’s growth outlook.
In other recent news, Erste Group Bank has been the subject of several notable developments. Deutsche Bank (ETR:DBKGn) has increased its price target for Erste Group Bank to EUR84, maintaining a Buy rating. This adjustment reflects Deutsche Bank’s positive outlook on Erste’s acquisition of a 49% stake in Santander Bank Polska, which is anticipated to significantly boost earnings per share and return on tangible equity. Similarly, UBS has upgraded Erste Group Bank’s rating from Neutral to Buy, raising the price target to EUR80. This upgrade is attributed to the expected positive impact of the Santander Polska acquisition on the bank’s sustainable return on tangible equity and earnings per share.
UBS highlights that the acquisition addresses previous growth concerns, offering new opportunities for capital allocation and expansion in the Polish market. The move is seen as strategically beneficial, potentially enhancing Erste’s regional presence and digital banking capabilities. Both Deutsche Bank and UBS view the acquisition as a transformative step for Erste Group Bank, enhancing its growth potential and capital efficiency. These developments underscore the strategic importance of the Santander Polska acquisition for Erste Group Bank’s future trajectory.
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