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On Thursday, UBS analyst Jason Napier adjusted the position on Societe Generale (EPA:SOGN) SA (GLE:FP) (OTC: OTC:SCGLY), downgrading the stock from Buy to Neutral, despite increasing the price target from €44.00 to €48.00. The revised price target reflects an uptick in peer group multiples from 6.8x to 7.3x. The bank, currently valued at $41 billion by market capitalization, trades at a P/E ratio of 8.38x. Napier’s assessment follows Societe Generale’s first-quarter financial performance, which surpassed market expectations with pre-tax profit (PBT) and pre-provision profit (PPP) exceeding forecasts by 14% and 10%, respectively.
Societe Generale’s financial results showed a modest income improvement of 2% and a slight reduction in costs by 1%. This performance highlighted the bank’s relatively narrower margins. Furthermore, the bank’s common equity tier 1 (CET1) ratio outperformed by 20 basis points, reaching 13.4%. This robust capital position is anticipated to enable Societe Generale to start issuing interim dividends in the first half of the year and to announce a share buyback program.
The bank’s stock has actually surged 84.25% year-to-date and 96.69% over the past year, according to InvestingPro data, while UBS’s updated profit forecasts for Societe Generale are only marginally increased by 0-5%. Earnings per share (EPS) projections remain largely unchanged as they are adjusted for the anticipated higher share count resulting from the increased share price. The stock currently trades near its 52-week high of $10.66, with a Fair Value assessment suggesting the current price reflects fair market value. While UBS acknowledges the potential for positive EPS revisions should Societe Generale meet its fiscal year 2026 cost/income targets, the current distributed yield forecasts for fiscal years 2025 and 2026 stand at 11%, with the price-to-earnings (P/E) ratio at 6.8 times, matching that of its peer BNP.
In light of these factors, UBS suggests that Societe Generale’s stock performance is now aligned with current events. The decision to downgrade reflects the bank’s current valuation, which is seen as balanced following the recent price surge. The bank’s financial health appears solid, receiving a "GOOD" overall Financial Health Score from InvestingPro, with expectations of shareholder returns in the form of dividends (current yield: 1.73%) and buybacks contributing to the positive outlook. However, the neutral rating indicates that the current stock price may adequately reflect the bank’s near-term prospects.
In other recent news, Societe Generale SA has been the focus of multiple analyst updates following its financial performance and strategic developments. Jefferies has raised the bank’s price target to €55, maintaining a Buy rating and expressing confidence in Societe Generale’s ability to achieve a return on tangible equity (ROTE) of 9-10% by 2026. This optimistic outlook is further supported by an 8% increase in earnings estimates for 2025 and 2026. Meanwhile, JPMorgan has upgraded Societe Generale’s stock rating to Overweight, with a new price target of €46, citing improved capital visibility and enhanced asset quality as key factors.
Goldman Sachs has also adjusted its price target for Societe Generale, increasing it to EUR 43.25 following stronger-than-expected fourth-quarter results in 2024, particularly in the Corporate Investment Banking division. Despite the positive financial performance, Goldman Sachs maintains a Neutral rating on the stock. On the other hand, Kepler Cheuvreux has downgraded Societe Generale from Buy to Hold, keeping the price target at EUR 43.90, due to the stock’s proximity to the target price.
These developments highlight a range of perspectives among analysts regarding Societe Generale’s future performance. While some firms project strong financial outcomes and strategic advancements, others remain cautious, balancing recent achievements against market expectations. Overall, these updates reflect varied analyst sentiment towards Societe Generale’s potential for growth and shareholder returns.
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