BNP Paribas Gains Three New Bulls as Analysts Say Stock Is Cheap

Three major institutions have upgraded BNP Paribas shares within a week, signaling a shift in sentiment for the French bank. UBS raised its rating to 'buy' from 'neutral' while increasing its 12-month price target to €103 from €77.40. JPMorgan followed suit, elevating its recommendation to 'overweight' and setting a price target of €102.

The moves reflect growing confidence in the bank's ability to generate returns amid a challenging regulatory environment. BNP Paribas is trading at a forward P/E ratio of 7.5, which is significantly lower than its European banking peers. This valuation gap is attributed to a combination of capital management improvements and expectations of stronger earnings in the coming years.

JPMorgan analysts have outlined a 'Blue Sky' scenario in which BNP Paribas shares could rise more than 40%. This outcome would require the bank to successfully appeal its recent Sudan verdict and meet revenue targets from asset sales in Turkey and Algeria.

Why Is BNP Paribas Attracting New Buyers?

The bank's improved capital position is a key factor behind the upgrades. JPMorgan highlighted BNP Paribas' disposal of a 67% stake in its Moroccan unit, BMCI, as a major contributor to capital relief. These transactions are expected to boost the bank's CET1 ratio, which is projected to reach 13% by the end of 2026.

UBS also cited strong earnings growth and a favorable operating leverage outlook as reasons for its upgrade. The firm raised its FY26 to FY28 EPS forecasts by 2% to 5%, reflecting a more positive view of the bank's restructuring efforts. These efforts include asset disposals and a strategic focus on low-risk-weighted asset growth.

What Are Analysts Watching Next?

The ongoing Sudan litigation remains a critical watchpoint. A New York judge recently denied BNP Paribas' request to throw out a $20.75 million verdict against the bank. The firm is appealing the decision, with analysts believing it has sufficient capital to cover potential liabilities.

In addition to the litigation, analysts are monitoring the bank's ability to execute asset sales in Turkey and Algeria. These transactions are expected to further strengthen BNP Paribas' capital position and support higher shareholder payouts. UBS estimates that the bank's return on tangible equity could reach 13% by 2028, narrowing the gap with the sector average.

Market reactions have been positive, with BNP Paribas shares rising more than 4%. The stock is now the best performer in the European banking sector.

What's the Outlook for Shareholder Returns?

JPMorgan analysts emphasized that BNP Paribas is now better positioned to return capital to shareholders. The bank has announced an exceptional buyback of €4 billion following the sale of BancWest, in addition to its regular buyback programs and 50% cash dividends.

UBS also highlighted the bank's ability to generate capital organically, with risk-weighted asset growth expected to remain in the low-single-digit range through 2027. This combination of capital generation and disciplined growth supports higher shareholder returns.

The upgrades come as European banks have enjoyed a strong finish to 2025, with the Stoxx 600 banking index surging 67%. BNP Paribas, which rose 36% last year, has underperformed the broader sector but now appears undervalued compared to its peers.

Analysts at UBS and JPMorgan believe the current valuation presents a compelling opportunity for investors. With earnings growth expected to outpace the sector and a robust capital position, BNP Paribas is now a top pick for those seeking value in the European banking sector.