Decline in Commerzbank's Performance Leading to DAX Setback
In a recent move, global investment bank Morgan Stanley has downgraded Commerzbank's shares from "Overweight" to "Equalweight," while raising the price target from 32 to 36 euros. This decision comes amidst the bank's ongoing strategy plan, where further progress is deemed necessary for a more optimistic rating.
The downgrade, however, does not necessarily indicate a bearish sentiment towards Commerzbank. On the contrary, the positive factors for the downgrade include Commerzbank's strong business momentum, exceeding second-quarter expectations in interest income and provisioning revenues by around 2%, and a positive economic outlook in Germany.
Commerzbank shares experienced a 2.6% loss on Tuesday, making them one of the biggest losers in the DAX. Despite this, the bank's second-quarter results exceeded expectations, with both interest income and provisioning revenues performing positively.
The cost of equity for Commerzbank has been lowered from 11.5% to 11.0% by Morgan Stanley to reflect the positive environment. The investment bank also set a new target return on tangible equity for Commerzbank at 15% in 2028.
UniCredit, with a 29% holding in Commerzbank (WKN: CBK100), could potentially support or weigh on the stock price, depending on how they manage their investment in the future.
Interestingly, DER AKTIONÄR, a financial publication, previously advised that Commerzbank shares may be overheated and suggested securing gains with a stop-loss at 29.00 euros for current investors. The publication has now explained the reasons behind the pullback in Commerzbank shares.
Amidst this, a new stock report titled "3 × 12% Dividend - Secure Now!" offers top picks with double-digit yields and strong fundamentals. Investors might consider sector stocks other than Commerzbank due to its current market situation, but the potential for growth remains.
It is important to note that the majority shareholder of Boersenmedien AG, the publisher of DER AKTIONÄR, has direct and indirect positions in the financial instruments mentioned in the publication or related derivatives. This information is not publicly disclosed.
As always, investors are advised to conduct thorough research and consult with financial advisors before making any investment decisions.
