UBS AG Top Line is a Challenge – BofA
2022.07.27 00:03
UBS AG (UBS) Top Line is a Challenge – BofA
By Sam Boughedda
UBS Group AG (NYSE:UBS) was downgraded to Neutral from Buy, with its price target cut from CHF19.5 to CHF16.5 by a BofA analyst on Tuesday.
The analyst said in a note that “UBS 2Q 22 net profit of US$2.1bn is modestly below VisibleAlpha consensus of US$2.2bn.”
However, they see a weaker top line and lower Wealth Management invested assets as likely to drive consensus earnings downgrades, resulting in BofA lowering their forecasts for UBS.
“UBS Bear market cuts, strategic considerations 14 June 2022 and cut them further today, with a 9% reduction to 2023E EPS. We are now 20% below 2023 VisibleAlpha consensus EPS and 12% below for 2024,” wrote the analyst.
He added that UBS’ strong second quarter cost control reduces space for further reductions, they think, in an environment where dollar cost inflation is high and Swiss Franc strength could build, following the recent rate hike by the Swiss National Bank.
The analyst went on to say that UBS has completed $3.7bn of its $5bn 2022 buyback program, with the capital return playing a part in supporting the shares relative to the market in recent months.
“With UBS earnings set to fall, we believe a modest valuation of 9x 2023E should provide support to the shares, but no further impetus,” concluded the analyst.
