Street Calls of the Week
Investing.com - Morgan Stanley downgraded Commerzbank AG (ETR:CBK) from Overweight to Equalweight on Tuesday, while simultaneously raising its price target to EUR36.00 from EUR32.00. The German bank, currently valued at $43.1 billion, has shown remarkable momentum according to InvestingPro data.
The investment bank cited Commerzbank’s solid second-quarter performance, with both net interest income and fees exceeding expectations by 2%. Morgan Stanley also acknowledged a favorable German macroeconomic outlook that contributed to the higher price target.
Despite these positive factors, Morgan Stanley expressed caution about Commerzbank’s valuation after the stock more than doubled this year. The bank now trades at 1.3 times tangible book value based on a 15% return on tangible equity target for 2028.
Morgan Stanley reduced its cost of equity assumption to 11% from 11.5% to reflect the positive German economic conditions, while moving its valuation timeframe to December 2026. The firm’s analysts indicated they would need more evidence of progress on Commerzbank’s strategic plan to justify a more bullish stance.
The research note highlighted that UniCredit’s 29% stake in Commerzbank could affect the share price in either direction, depending on what the Italian bank decides to do with its holdings.
In other recent news, Commerzbank has been the focus of several analyst downgrades despite positive adjustments in price targets. Goldman Sachs downgraded Commerzbank from Neutral to Sell, raising its price target to EUR34.10, citing the bank’s demanding valuation despite anticipated profitability improvements. Similarly, Deutsche Bank downgraded Commerzbank from Buy to Hold, increasing the price target to EUR35.00 due to valuation concerns, as the stock now trades at a significant premium compared to the sector. BofA Securities also downgraded Commerzbank from Buy to Neutral, raising the price target to EUR31.70, aligning with what it considers a fair valuation after a substantial share price increase. These downgrades reflect a cautious stance among analysts regarding Commerzbank’s current valuation levels. The bank’s shares have seen significant growth, with BofA Securities noting a 91% surge year-to-date. Despite these downgrades, the raised price targets suggest some confidence in Commerzbank’s future performance. Investors are advised to consider these recent developments as they evaluate their positions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.