In a report released today, Giulia Miotto from Morgan Stanley downgraded UBS Group AG (UBS – Research Report) to a Hold, with a price target of CHF34.00.
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Giulia Miotto’s rating is based on several factors influencing UBS Group AG’s financial outlook. A primary concern is the rising uncertainty regarding capital requirements. Miotto notes that the base case for additional capital has increased, which could constrain UBS’s ability to conduct share buybacks, thereby limiting the stock’s potential to outperform. This uncertainty leads to a cautious stance as the market awaits further clarification from Swiss authorities on capital rules.
Despite the uncertainties, UBS’s earnings profile remains robust, with Miotto acknowledging a positive outlook. Although there has been a slight reduction in earnings estimates, UBS is still projected to perform ahead of consensus, benefiting from both cyclical and structural factors. The integration of Credit Suisse and cost efficiencies in the Asset Management division are seen as positive developments. However, the balance between potential risks and rewards justifies Miotto’s Hold rating, as the situation may evolve once more clarity on capital requirements emerges.
According to TipRanks, Miotto is a 4-star analyst with an average return of 11.3% and a 69.23% success rate.
In another report released on February 5, Citi also maintained a Hold rating on the stock with a CHF30.00 price target.