TSX runs higher on rate cut expectations
Investing.com - Goldman Sachs downgraded Commerzbank AG (ETR:CBK) (OTC:CRZBY) from Neutral to Sell on Wednesday, while paradoxically raising its price target to EUR34.10 from EUR29.20. The move comes despite the bank’s impressive performance, with shares surging over 152% year-to-date and 175% over the past year.
The investment bank cited Commerzbank’s current valuation as "relatively demanding" despite acknowledging expected improvements in the German lender’s profitability through revenue growth and cost control.
Goldman Sachs noted that Commerzbank now trades at 13.0x price-to-earnings ratio, representing a 3.5-point premium compared to its European banks coverage universe.
While Goldman increased its target multiple for Commerzbank to 10.5x from 9.0x previously, reflecting the bank’s "above-average EPS growth over coming years," the new price target still implies approximately 10% downside to the current share price.
The firm expects Commerzbank to continue returning capital to shareholders through dividends and share buybacks as its profitability improves.
In other recent news, Commerzbank has experienced notable analyst activity with two major financial institutions adjusting their ratings for the company. Deutsche Bank downgraded Commerzbank from Buy to Hold, citing concerns about the stock’s valuation after its significant price increase over the past year. Despite the downgrade, Deutsche Bank raised its price target for the bank to EUR35.00 from EUR33.00. Similarly, BofA Securities downgraded Commerzbank from Buy to Neutral, also pointing to valuation concerns. BofA Securities adjusted its price target to EUR31.70 from EUR30.00, noting that the current valuation reflects a fair assessment based on future earnings projections. These recent developments highlight the cautious stance analysts are taking toward Commerzbank’s stock amidst its substantial market gains.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.