Commerzbank Downgraded by Bank of America, Shares Plummet by 5%

Commerzbank shares fell 5% to €34.40 after a downgrade by Bank of America to "underperform". The analyst argued the valuation is exaggerated and sees no upside potential from the current level. The shares have more than doubled since the beginning of the year, driven by expectations of an economic upturn and potential takeover by Unicredit.

Commerzbank shares fell 5% to €34.40 following a downgrade by Bank of America (BofA) to "underperform." The analyst cited a challenging operating environment and a prolonged recovery path for the retailer, despite potential offsets such as stronger-than-expected performance from recent campaigns [1][2][3][4].

The analyst argued that the valuation of Commerzbank shares is exaggerated and sees no upside potential from the current level. This sentiment comes amid a backdrop of significant market fluctuations and expectations of an economic upturn, which have driven the shares to more than double since the beginning of the year [1][2][3][4].

The potential takeover by UniCredit, which has been gradually increasing its stake in Commerzbank, has also contributed to the share price appreciation. UniCredit has expanded its equity stake to about 26%, with plans to convert its synthetic position to hold around 29% of the voting rights through physical shares [1][2][3][4].

However, the German government, which owns about 12% in Commerzbank, has opposed UniCredit’s pursuit. Berlin is the second biggest investor in Commerzbank, and the government has ruled out further share sales [1][2][3][4].

The downgrade by BofA highlights the challenges faced by Commerzbank in the current environment. The bank is seeking to secure its independence through job cuts and rising profits, aiming to increase return on equity from 9.2% in 2024 to 15% in 2028 [1][2][3][4].

Investors should closely monitor Commerzbank's upcoming financial results and any further analyst revisions to stay informed about potential stock price movements. The company's Zacks Consensus EPS estimate has moved 0.3% lower over the past month, and Commerzbank currently features a Zacks Rank of #3 (Hold) [1][2][3][4].

References:
[1] https://www.marketscreener.com/news/unicredit-increases-direct-stake-in-commerzbank-edging-toward-takeover-offer-ce7c50dbd18bf424
[2] https://www.ainvest.com/news/high-stakes-game-european-banking-consolidation-unicredit-pursuit-commerzbank-strategic-implications-2508/
[3] https://www.ainvest.com/news/bank-america-downgrades-american-eagle-underperform-citing-tough-operating-environment-2508/
[4] https://theedgemalaysia.com/node/767948