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On Wednesday, Kepler Cheuvreux analyst Jacques-Henri Gaulard adjusted the rating for Societe Generale (EPA:SOGN) SA (GLE:FP) (OTC: OTC:SCGLY), moving it from Buy to Hold. The price target remains set at EUR43.90. Gaulard’s decision comes as Societe Generale’s stock price approaches the target too closely, prompting a reassessment to ensure consistency with the firm’s recent downgrade of BNP Paribas (OTC:BNPQY) to ’Reduce’. The bank, currently trading at $8.83 with a market capitalization of $34.84 billion, shows a relatively modest P/E ratio of 9.29, according to InvestingPro data.
The rating change marks a shift in perspective since the last upgrade to Buy on January 13, 2020. Societe Generale has since experienced significant volatility, described by Gaulard as a "true rollercoaster." InvestingPro data confirms this impressive trajectory, showing a 59.12% year-to-date return and a robust 70.18% gain over the past year. This surge has led to the bank outperforming its peers by 25%, with InvestingPro’s price momentum score of 3.88 reflecting this strong performance.
Gaulard noted that the bank’s strong performance has altered its perception among investors. Initially viewed as a deep-value trading option, Societe Generale is now being discussed as a viable long-term investment with a compelling and sustainable equity story. According to InvestingPro analysis, the bank maintains a ’Fair’ overall financial health score of 2.34, with additional insights available to subscribers, including 8 more exclusive ProTips that could help investors make more informed decisions.
The analyst’s commentary reflects a shift in investor sentiment towards Societe Generale, acknowledging its robust performance in the current financial year. Gaulard’s unchanged price target of EUR43.90 suggests that the current stock price has nearly reached the expected value, leading to the rating downgrade to Hold.
Societe Generale’s journey over the past years, particularly its year-to-date performance, has been noteworthy within the European banking sector. The bank’s stock has not only appreciated significantly but has also outpaced its European counterparts, indicating a strong turnaround and a positive reception to its growth narrative among investors.
In other recent news, Societe Generale has seen a series of analyst upgrades and increased price targets. Jefferies raised its price target for Societe Generale to €55, up from €45, while maintaining a Buy rating. The firm projects an 8% increase in earnings estimates for 2025 and 2026, citing expected improvements in operational efficiency and capital distributions. JPMorgan also upgraded Societe Generale’s stock rating from Neutral to Overweight, raising the price target from €29 to €46. JPMorgan anticipates the bank will surpass its return on tangible equity (ROTE) targets for 2025 and 2026, forecasting a high capital return yield.
Goldman Sachs adjusted its price target to €43.25 from €29.00, maintaining a Neutral rating. This change follows stronger-than-expected fourth-quarter revenues and lower operating costs. Barclays (LON:BARC) upgraded Societe Generale from Equalweight to Overweight and increased the price target to €41.00, noting the potential for significant valuation improvement if the bank meets its 2026 ROTE targets. These recent developments reflect a broadly optimistic outlook among analysts regarding Societe Generale’s financial performance and strategic direction.
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