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On Monday, RBC Capital Markets adjusted their valuation of Deutsche Bank (ETR:DBKGn) (DBK:GR) (NYSE: DB), raising the price target to EUR26.00 from the previous EUR22.00, while reaffirming their Outperform rating on the bank’s shares. The adjustment reflects a positive outlook based on both internal and external factors influencing the German financial institution. The bank’s strong performance is evident in its impressive 61.76% return over the past year, with shares currently trading near their 52-week high of $25.03. According to InvestingPro analysis, Deutsche Bank appears undervalued based on its Fair Value calculations.
The RBC Capital analyst highlighted the fiscal expansion in Germany as a key driver, noting that it has led to an advantageous situation for Deutsche Bank, characterized by upgraded GDP forecasts and a steeper yield curve. These developments are seen as double benefits for the bank, potentially enhancing its financial performance. With a market capitalization of $48.04 billion and a P/E ratio of 11.99, the bank offers a dividend yield of 2.24%, having raised its dividend for four consecutive years. InvestingPro subscribers can access 12 additional key insights about Deutsche Bank’s financial position and growth prospects.
Despite acknowledging the near-term risks associated with the current geopolitical and macroeconomic uncertainties, such as tariffs, the analyst expressed confidence in the bank’s prospects. The belief is that, over the long term, Deutsche Bank’s shares have the potential for a further re-rating. This optimism is supported by the acceleration of Germany’s economic growth and Deutsche Bank’s ability to leverage internal mechanisms to bolster its performance.
The report by RBC Capital suggests that while the market’s estimates have not caught up with the bank’s share price increases, there remains room for a positive reassessment of Deutsche Bank’s value. The new price target of EUR26.00 is indicative of this sentiment, pointing towards a more favorable future for the bank’s stock amidst the current economic climate.
In other recent news, Deutsche Bank announced plans to cut approximately 2,000 jobs from its retail banking sector by 2025, as part of an ongoing cost-cutting initiative. The bank has also been closing branches as part of this strategy. In earnings-related developments, Deutsche Bank reported a 17% year-over-year decline in pre-tax profit for Q4 2024, amounting to €583 million, which fell short of the consensus estimate of €945 million. Despite this, the bank’s net revenues increased by 9% year-over-year to €7.2 billion, with notable 30% growth in the Investment Bank segment, while the Corporate Bank and Private Bank segments saw revenue declines.
Elsewhere, Citadel Securities posted a record trading revenue of $9.7 billion for the year, marking a 55% increase from the previous year and surpassing the trading revenues of major European banks, including Deutsche Bank. In analyst updates, CFRA raised Deutsche Bank’s 12-month price target to $17, maintaining a Sell rating due to the bank’s weaker return on equity profile compared to peers. The European Union is also planning to seek feedback on potentially delaying new trading regulations, which could impact banks like Deutsche Bank. These developments come amid broader market pressures, including trade tensions affecting European banks and auto stocks.
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