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Investing.com -- Swedbank (ST:SWEDa) was downgraded to “hold” from “buy” by analysts at Deutsche Bank (ETR:DBKGn), who also lowered the bank’s target price from SEK271 to SEK260.
In a note led by analyst Marlene Eibensteiner, Deutsche Bank cited a narrowing valuation gap between Swedbank and its domestic peers, which has reduced the stock’s relative attractiveness. The bank is currently trading at approximately 9.4x price-to-earnings ratio.
Eibensteiner also pointed to persistent uncertainty around a potential settlement with U.S. authorities related to Swedbank’s historical operations in the Baltics.
The lack of any new information on the matter limits upside potential for the shares in the near term.
The downgrade reflects ongoing concerns about future net interest income, particularly in the context of expected interest rate cuts by central banks, which could weigh further on Swedbank’s earnings.
While these factors are not unique to Swedbank, Deutsche Bank sees fewer compelling reasons to remain overweight on the stock given the recent re-rating and unresolved legal issues.