On Thursday, JPMorgan (NYSE:JPM) shifted its stance on Commerzbank AG (CBK:GR) (OTC: OTC:CRZBY), raising the stock from Neutral to Overweight with a new price target set at €17.20. This move comes in the wake of recent market activities indicating that the bank may become a merger and acquisition (M&A) target.
The upgrade was prompted by the announcement that UniCredit (LON:0RLS) has acquired approximately a 9% equity stake in Commerzbank (ETR:CBKG). This development has led to speculation that Commerzbank could be involved in potential M&A activities. UniCredit has also indicated that it is prepared to seek regulatory approval to increase its stake beyond 9.9% if it aligns with its financial strategy.
JPMorgan's analysis suggests that Commerzbank's current trading metrics, which include a price to earnings (P/E) ratio of 5.4 and a price to tangible book value (P/TBV) of 0.5, coupled with a projected return on tangible equity (RoTE) of 9.3% in 2026, make the bank's shares an attractive proposition. The investment firm anticipates that M&A speculation will primarily drive Commerzbank's share price in the near term.
The price target of €17.20 is based on an exit P/E ratio of 6.4x on the bank's projected 2026 earnings. According to JPMorgan, even after a significant rally of 17% in Commerzbank's shares on the previous day, there remains nearly a 17% upside potential for the stock based on their forecasts.
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