Unicredit rides rumors ahead of plan: title + 28% from lows and analysts see room for further rally


Banks in evidence in Piazza Affari with Unicredit which stands at best in the class after the first hour of trading. The title marks a jump of over 2.5% to 11.80 euros. The sector benefits from risk-on markets with government bond yields that continue to rise (10-year Bund yields -0.34% at the moment). Banking stocks benefit from higher rates.

The spotlights are on third quarter 2019 accounts coming in a couple of weeks, but there are those who are already looking at new business plan to be presented in London on December 3rd. The latest rumors see the CEO Jean Pierre Mustier determined to create a German holding company to unite all foreign holdings. Last week the president of CariVerona Foundation, Alessandro Mazzucco, hoped that the new industrial plan would contain "an extraordinary maneuver that would give attention, visibility, attractiveness", without specifying whether it also referred to M&A hypotheses. The Scala Foundation is a shareholder of Unicredit with about 1.8% of the capital.

Unicredit remains the top pick of Hsbc, consensus analysts sees the title 0 over 14 euros

Last Friday HSBC confirmed Unicredit as its top pick among banks confirming the Buy and target price judgment at 14.5 euros (compared to the previous 15 euros).

From the annual minimums reached last August 14 to 9.19 euros, the Unicredit share marks a leap of more than 28%, among the best within the banking sector. The title had approached dangerously in August i historical lows of July 2016 that stand at € 8.78.

The majority of analysts who cover the UniCredit stock are positive (source Bloomberg). As many as 87.1% of experts rely on the stock (Buy rating), 12.9% recommend maintaining them (Hold) while no analyst is positioned on the Sell. The 12-month average price of the UniCredit stock is equal to € 14.14 with a 20% upside potential compared to current prices. Before the publication of the 2nd quarter accounts, just over two years ago, the target price on the stock was 14.99 euros.

Less than 2 months to the new plan

The new Unicredit plan is coming in less than two months. Among the four actions approved by UniCredit as a starter of new 2020-2023 strategic plan the goal of reaching the top of the 200-250pb buffer of the CET1 ratio on the capital requirements by the end of 2019 stands out, through the sale of some assets; the progressive alignment over time of the BTP portfolio to the portfolios held by Italian and European banking groups is also envisaged. On the cost containment front, summer rumors were on the horizon possible redundancies for 10 thousand units of the group, most of it in Italy. Mustier, in a letter to employees, stated that any spillage will be managed through early retirement.

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