Barclays upgrades Banca Generali stock on strong EPS outlook By Investing.com

On Tuesday, Banca Generali (BIT:) SpA (BGN:IM) stock received an upgraded rating from Barclays, moving from Equalweight to Overweight. The financial institution also saw its price target increased to €48.60, up from the previous €39.30. The adjustment comes with a positive outlook on the company’s earnings per share (EPS) for the years 2024 to 2026.

The Barclays analyst highlighted a projected average EPS increase of about 4% during this period, which is 6% above the consensus. The upgrade is supported by several key factors that are expected to contribute to Banca Generali’s growth and performance.

Firstly, the expansion of Banca Generali’s financial advisor network is a crucial element. The company has been focusing on enhancing the productivity of its current advisors, and a boost in recruitment is anticipated to further increase inflows. Historically, recruitment efforts have shown a correlation with market performance, indicating potential for future inflows.

Secondly, the analyst pointed out the potential benefit of a declining BTP yield for Banca Generali. The company has demonstrated a mostly negative correlation between its assets under management inflows and BTP yield when compared to its peers. This suggests that rate cuts could have a more favorable impact on Banca Generali than on other firms.

Lastly, Banca Generali’s ability to operate as a Swiss bank is seen as a significant strategic advantage that could enhance its growth prospects. The analyst includes an expected €500 million in net inflows in 2024 and €1 billion from 2025 onwards, specifically from the Swiss market. This move is considered an underappreciated aspect of Banca Generali’s strategy that may contribute to its mid-term potential.

The upgrade and increased price target reflect a positive view on Banca Generali’s strategic initiatives and their potential to drive the company’s growth in the coming years.

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