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On Wednesday, Kepler Cheuvreux adjusted its stance on BNP Paribas SA (ETR:BNPP), moving the stock rating from "Hold" to "Reduce" while increasing the price target to €74.90, up from the previous €65.10. The decision by Kepler Cheuvreux follows a period where BNP Paribas (OTC:BNPQY) shares traded above the new target price and outperformed the Stoxx Europe 600 Banks Index (SX7P) by 7% since the beginning of the year. InvestingPro data shows the stock has delivered an impressive 38.34% return year-to-date, with the bank maintaining its position as a prominent player in the industry with a market capitalization of $94.32 billion.
Analysts at Kepler Cheuvreux noted that the revision was influenced by the bank’s current share price exceeding the target price (TP) and a recent performance that surpassed the banking sector index. They also expressed a lack of confidence in the bank’s targets for 2026, describing them as "uninspiring," and considered the goals set for the 2028-2030 period to be overly ambitious. The bank currently trades at a P/E ratio of 8.05 and offers a substantial dividend yield of 4.9%, having raised its dividend for five consecutive years according to InvestingPro analysis.
The report also pointed out that BNP Paribas’ extensive financial communication is likely linked to the upcoming Annual General Meeting (AGM) scheduled for May 13, 2023. At this meeting, proposals to increase the retirement age of the bank’s Chairman and CEO will be presented. This issue has drawn the attention of investors and was explored in the note provided by the analysts.
Despite the downgrade, Kepler Cheuvreux raised its price target for BNP Paribas, which reflects a rollover of their figures to 2026 estimates. The valuation now also includes a 13% Common Equity Tier 1 (CET1) capital constraint, which is a regulatory measure for banks to ensure financial stability and resilience. InvestingPro Fair Value analysis suggests the stock is currently slightly undervalued, with 12 additional exclusive insights available to subscribers, including detailed valuation metrics and growth projections.
In other recent news, BNP Paribas has been in the spotlight following reports that the Belgian government is considering selling its stake in the bank. This potential sale is aimed at establishing a defense fund, according to the French financial media outlet Les Echos. Belgium, through its financial arm SFPIM, holds a 5.6% stake in BNP Paribas, which translates to 63.3 million shares. If the sale proceeds, it is estimated to be worth around 4.84 billion euros, or approximately $5.22 billion. The Belgian government has not yet commented on these reports. This development comes after BNP Paribas shares had seen a 32.5% increase since the beginning of the year, reaching an 18-year high last week. The news of the potential sale has contributed to a sharper decline in BNP’s shares compared to the European Stoxx banking index.
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