BofA Securities upgraded Credit Suisse Group AGCS to Buy from Neutral with a CHF 3.60 price target suggesting more than 20% upside potential.
BofA analyst sees the rebuilding of Credit Suisse as “taking time.” However, the bank’s CHF 12 billion market cap is the same as Julius Baer’s despite Credit Suisse being one-and-a-half times larger in wealth management and having a leading domestic bank and asset management business.
The analyst said that with Europe’s “lowest price/book,” he sees the shares trading at an “attractive” level.
In October, Credit Suisse enlarged the banking syndicate underwriting the rights issue and announced the reference price for the proposed CHF4 billion capital raise.
The analyst writes that decision to exit investment banking creates the potential for a bank with half the balance sheet and, as a result, a much lower capital and debt requirement.
New Credit Suisse is focused on its lower-risk, high-market-share wealth and Swiss banking businesses.
Last Month, Credit Suisse expected its investment banking business and the group to report a loss before taxes of about CHF 1.5 billion for its fourth quarter.
BofA expects its business exits to create free capital, with as much as CHF 9 billion available ultimately for distributions.
Price Action: CS shares are up 1.96% at $3.39 on the last check Friday.
