On Friday, UBS adjusted its stance on Baloise Holding AG (BALN:SW) (OTC: BLHEF), downgrading the stock from Buy to Neutral, while increasing the price target to CHF170.00 from CHF155.00. The revision comes ahead of the insurer's investor day scheduled for September 12.
The firm outlined several key themes for Baloise management to address, including potential life back book transactions, cost and asset optimization, and possible mergers and acquisitions (M&A). These topics are expected to be significant discussion points during the upcoming investor event.
UBS's sum-of-the-parts (SOTP) analysis, which incorporates trading and transaction multiples, suggests a valuation of CHF3.5 billion each for Baloise's life and non-life businesses.
Additionally, the asset management and banking sectors are collectively valued at CHF0.7 billion, while the holding company, which includes innovation investments, is valued at a negative CHF1.2 billion. The analysis also accounts for CHF0.6 billion of potential excess capital that could be released over time from Baloise's subsidiaries.
Despite the increased price target, UBS's SOTP indicates an overall per share value of CHF155, which is below the new CHF170 price target. The discrepancy is attributed to the allowance for operational improvement in the base valuation, which employs a discounted cash flow (DCF) of cash remittances as a method for assessment.
Investors and stakeholders of Baloise Holding AG are likely to closely monitor the outcomes of the investor day for insights into the company's strategic direction and potential impacts on the stock's performance in the market.
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