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On Tuesday, UBS analyst Ignacio Cerezo adjusted the rating for CaixaBank SA (CABK:SM) (OTC:CAIXY), moving it from Buy to Neutral. The new price target set by UBS is EUR7.95, up from the previous EUR7.60. This change follows a notable increase in the bank’s share value, which has risen approximately 45% year-to-date and about 215% since early 2022. CaixaBank’s shares have reached historical highs, leading to a valuation that UBS deems stretched, with a price-to-tangible-book value (PTBV) ratio of around 10.3x and approximately 1.6x PTBV for an expected return on tangible equity (ROTE) of about 16% for the year 2026.
Cerezo pointed out that CaixaBank’s roughly 20% premium in price-to-earnings (PE) compared to the sector reflects a less attractive capital return, with an estimated yield of around 7% for 2025 and 2026. This is less appealing than in the past, especially when the sector average yield is closer to 9%. Despite CaixaBank’s strong fundamentals, which include good commercial momentum and revenue diversification, as well as a sustainable ROTE of around 16% and an estimated 1-2% compound annual growth rate (CAGR) in earnings per share (EPS) from 2025 to 2027, UBS believes these positives are already factored into the current share price.
The analyst emphasized that while CaixaBank’s fundamentals remain robust, with sound commercial momentum and revenue diversification, the current stock valuation fully incorporates these strengths. The bank’s sustainable ROTE and EPS CAGR are in line with expectations, but the market has already priced in these aspects, prompting the downgrade to a Neutral rating.
UBS’s assessment of CaixaBank’s valuation and future prospects reflects a cautious stance after the significant appreciation in the bank’s share price. The new price target of EUR7.95, despite being an increase from the prior target, accompanies a more reserved outlook on the stock’s potential for further gains in the near term.
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