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Investing.com -- Banco Comercial Português (BCP) has received a more cautious outlook from analysts at UBS Global Research and Morgan Stanley (NYSE:MS), both of whom have adjusted their recommendations due to valuation concerns and limited upside potential following a period of strong stock performance.
UBS downgraded BCP to “neutral” from “buy,” pointing to a stock price that has already priced in much of the bank’s expected future performance.
Despite strong fundamentals and a solid capital position, BCP has begun to underperform the sector in recent months.
Analysts noted that earnings revisions have been weaker than those of southern European peers, with 2025 consensus estimates declining slightly while competitors have seen upgrades.
With limited room for earnings-per-share growth and no clear catalysts on the horizon, UBS believes the risk-reward balance is now more neutral.
Morgan Stanley has also turned more cautious, shifting its rating to “equal-weight” from “overweight” and removing BCP from its list of top European stock picks.
While the bank’s earnings resilience remains intact, analysts cited reduced visibility on capital returns. Initially, excess capital was expected to lead to higher shareholder payouts, but management has indicated these funds will be directed toward loan growth instead.
Given that BCP’s stock has surged nearly 100% in the past year, Morgan Stanley now sees little room for further gains, raising its price target only slightly to €0.58, implying an 8% upside.
As both brokerages recognize, BCP has several strengths, including a strong balance sheet and international expansion, especially in Poland. It is expected that a period of consolidation will follow without clear near-term catalysts.
Possible upsides include a faster resolution of legal issues in Poland, stronger loan growth, or acquisitions or buybacks of capital. As of now, analysts believe the stock has largely run its course following its recent rally.