EUR/USD likely to find a peak near 1.25: UBS
On Friday, UBS analysts downgraded Swedbank stock (SWEDA:SS) (OTC: SWDBY (OTC:SWDBY)) from a Buy to a Neutral rating. The decision follows the bank’s remarkable outperformance, with shares surging over 40% in the past six months. InvestingPro data shows the stock’s RSI indicates overbought territory, supporting UBS’s view that the valuation gap with Nordic peers has closed.
Despite the downgrade, UBS raised the price target for Swedbank stock to SEK 267 from the previous SEK 262. The bank, currently valued at $29.72 billion, trades at a P/E ratio of 8.22 and offers a substantial 6.86% dividend yield. According to InvestingPro Fair Value analysis, the stock appears slightly overvalued at current levels. Analysts see a potential anti-money laundering (AML) settlement as only a modest positive catalyst, expecting minimal impact on earnings and distribution estimates.
UBS expressed caution regarding Nordic banks, citing the absence of any Nordic banks in its European top picks and no Buy ratings among Swedish banks. The firm’s preference in the region remains for Danske and Nordea, both of which are trading around one P/E point below their peers.
Swedbank’s recent stock performance has been strong, but UBS’s latest assessment reflects a more cautious stance on the potential for further gains. The analysts’ focus on valuation and regional preferences underscores their strategic approach to the Nordic banking sector.
In other recent news, Swedbank has been fined $1.29 million by the financial supervisory authority in Sweden for not complying with security protection regulations. These violations took place between July 2022 and January 2024, as the bank failed to assess its need for security protection properly and did not meet the requirements for a comprehensive security protection analysis. Additionally, Citi analysts have downgraded Swedbank’s stock rating from Buy to Neutral and reduced the price target from SEK295.00 to SEK243.00. This adjustment follows Swedbank’s net interest income outperforming consensus estimates in the latter part of 2024, despite concerns about near-term pressure on net interest income due to timing differences. Citi analysts have also projected a 4% shortfall below consensus on net interest income for the first quarter of 2025, leading to a 6% lower pre-provision operating profit estimate. They have placed a negative 90-day Catalyst Watch on Swedbank shares, reflecting apprehensions about the bank’s earnings outlook for the first half of 2025. The downgrade and price target reduction suggest a more cautious approach to the bank’s valuation amidst these challenges.
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