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On Tuesday, UBS analysts adjusted their stance on Banco BPM SpA (BAMI:IM) (OTC: BNCZF), downgrading the stock from Buy to Neutral, despite increasing the price target to €10.00 from €9.40. The revision reflects a belief that the potential valuation benefits from integrating Anima’s additional earnings have become constrained, as the stock is already trading at a premium compared to its peers. This view aligns with InvestingPro analysis, which indicates the stock is currently trading slightly above its Fair Value, with a P/E ratio of 7.86. The approval of the Danish Compromise, which is yet to be granted, is also a factor influencing the stock’s future performance.
The UBS team noted that while Banco BPM’s shares have seen a significant year-to-date increase of approximately 30%, the room for further growth seems limited. According to InvestingPro data, the stock has delivered impressive returns of 65% over the past year and is currently trading near its 52-week high. The new price target of €10.00 per share represents a modest rise from the previous €9.40, acknowledging improvements expected in fee progression and cost of risk. However, the analysts have taken a cautious approach, with earnings estimates for 2025-2029 being adjusted upwards by only 2-3%. InvestingPro subscribers have access to 12 additional key insights about Banco BPM’s financial health and growth prospects.
The bank’s earnings forecasts for 2026-2027, excluding the potential contributions from Anima if the acquisition is successful, are still 6-9% below Banco BPM’s own target plans. UBS’s conservative outlook for 2027 includes expectations of more modest revenue growth and the possibility of increased provisions, accounting for slightly higher cost of risk and other risks and charges.
The UBS analysts’ commentary underscored the limited upside for Banco BPM’s valuation, citing the stock’s current premium pricing and its dependence on the pending approval of the Danish Compromise. The firm’s adjusted earnings estimates reflect a prudent view on revenue and provision expectations for the coming years.
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