UBS price target lowered to CHF29 from CHF31.50 at RBC Capital

RBC Capital lowered its price target on UBS Group AG (NYSE:UBS) to CHF29.00 from CHF31.50 on Thursday, while maintaining an Outperform rating on the Swiss banking giant’s stock. According to InvestingPro data, UBS currently trades at $30.77, with analysts maintaining a consensus buy recommendation.

The adjustment comes in response to Switzerland’s current "Too Big To Fail" (TBTF) regulatory proposal, which RBC Capital describes as appearing to represent a "worst case" scenario for the bank.

RBC Capital believes UBS could absorb the regulatory changes without further cuts to shareholder distributions, citing the proposal’s longer implementation period as a mitigating factor.

The firm incorporated what it calls a "harsher outcome" on deferred tax assets and software in its valuation model, leading to the reduced price target, though the new target remains above UBS’s current share price.

Despite near-term regulatory pressures, RBC Capital sees "potential for a more favourable outcome and possibly capital optimisation benefits" for UBS, while noting it will "take time to have full visibility" on the situation.

In other recent news, UBS Group AG reported significant developments concerning its capital requirements and analyst ratings. UBS has been actively contesting new regulatory proposals by the Swiss Federal Council that would increase its capital requirements, potentially requiring an additional $42 billion in Common Equity Tier 1 (CET1) capital. Despite this, UBS plans to maintain its financial targets and continue with its capital return plans, including a dividend increase and share buybacks in 2025. In the realm of analyst ratings, Jefferies upgraded UBS’s stock from Hold to Buy, citing expected clarity in the bank’s capital situation and a positive earnings outlook. They set a new price target of CHF37.00, highlighting optimism about UBS’s earnings trajectory and return on tangible equity. Conversely, Morgan Stanley (NYSE:MS) downgraded UBS from Equalweight to Underweight, expressing concerns about capital constraints and reducing its price target to CHF26.00. Meanwhile, Citi maintained a Neutral rating, acknowledging the extended transition period for UBS to meet new capital requirements. These developments reflect ongoing discussions and adjustments in UBS’s strategic financial planning amid evolving regulatory landscapes.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.