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On Monday, DBS Group (OTC:DBSDY) Holdings (DBS:SP) (OTC: DBSDY) received an upgraded rating from Goldman Sachs, moving from Neutral to Buy. The financial institution's price target was also increased to SGD43.10, up from the previous SGD41.00. The upgrade follows a reassessment by Goldman Sachs, which now anticipates a more robust growth in total book value for DBS.
The revised outlook suggests an 18% compound annual growth rate (CAGR) over the next two years for DBS, positioning it as the fourth highest book value compounder among ASEAN banks covered by Goldman Sachs, trailing just behind Indonesian banks. This outlook is based on the bank's strategic measures to reposition its balance sheet and increase contributions from non-net interest income (non-NII) sources.
Goldman Sachs' confidence in DBS's ability to maintain strong returns is bolstered by the proactive steps taken by the bank's management. These steps are especially pertinent as the market heads into a cycle of interest rate cuts. The firm's analysts believe that DBS is well-prepared to protect its robust returns during this period.
Following a thorough analysis of DBS's profitability, Goldman Sachs has also chosen to upgrade its earnings per share (EPS) forecasts for the years 2024-2027. The revised estimates show an increase of up to 4.3%, reflecting an expectation that profits for DBS Group will remain strong for an extended period.
The upgrade from Goldman Sachs comes as a significant endorsement for DBS Group Holdings, signaling a positive outlook for the bank's financial performance in the coming years. With a focus on maintaining a strong balance sheet and diversifying income sources, DBS appears well-positioned to navigate the anticipated rate cut cycle while continuing to grow its book value and earnings.
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