Fubotv earnings beat by $0.10, revenue topped estimates
Investing.com -- Commerzbank (ETR:CBKG) shares dropped over 3% on Thursday after Bank of America downgraded the stock to “neutral” from “buy,” saying the current valuation already reflects most of the upside.
The downgrade follows a 91% year-to-date rally, which the bank says leaves limited room for further multiple expansion.
BofA analysts raised their price objective to €31.70 from €30 but argued the stock looks fairly priced.
At the time of the report, dated July 10, the shares were trading at €30.08. The bank now trades at 9x forward P/E and 1.1x price-to-tangible book value for an estimated 12.5% return on tangible equity (ROTE) in 2026, metrics the analysts view as fully valued.
While BofA maintained a constructive view on fundamentals, it cited limited scope for near-term rerating.
It identified continued strength in net interest income (NII), cost efficiency gains, strong capital build-up, and benign asset quality.
BofA’s 2025 NII estimate of €8.3 billion is above Commerzbank’s €7.8 billion target and ahead of consensus. The brokerage also expects higher loan growth in corporate clients, better German mortgage momentum following regulatory relief, and upside from hedge income.
“We still think CBK is the cleanest way to position for the “German fiscal expansion trade” and we are 11% above sell-side consensus net profit in 2025- 27E. But the market has front-loaded most of the upside, in our view,” the analysts said. The brokerage shifted its top Germany bank pick to Deutsche Bank (ETR:DBKGn).
BofA expects Commerzbank to raise its 2025 NII guidance to €8 billion in the upcoming second-quarter earnings and potentially announce a new share buyback request to the ECB.
The brokerage forecasts a second €1.85 billion repurchase tranche by Q1 2026. However, it anticipates a 75% sequential drop in Q2 net income due to €560 million in restructuring costs, which is above consensus expectations of €520 million.
Net income attributable to shareholders is projected at €264 million for Q2, down from €834 million in Q1.
Despite the downgrade, BofA raised its price objective based on a Gordon growth model using a 12.5% 2026E ROTE, 11% cost of equity, and 1% growth rate, implying a 1.15x price-to-tangible book multiple. Excess CET1 capital above the 13.5% medium-term target was also factored into the valuation.
Key forecast metrics include a 2025 EPS of €2.52 as compared to €1.88, dividend per share of €0.85, and a payout ratio of 125%, including share buybacks.
CET1 ratio is estimated at 14.8% in 2025, with a total capital return equivalent to 40% of market cap over four years.