Unicredit flies, but JP Morgan rejects it. Watch out for several risks


Estimated reading time: 3 minutes

by Davide Pantaleo


Ftse Mib

Unicredit leaps forward without being conditioned by the downgrade of the US bank. That’s why the view is no longer bullish.

A decidedly brilliant session today for Unicredit which gained ground for the third consecutive day, marking a decidedly more substantial increase than that of the Ftse Mib.

Unicredit on display, stronger than the Ftse Mib

The stock, after gaining just half a percentage point yesterday, today managed to do much better, stopping at 7.073 euros, with a rally of 4.44% and over 27 million shares traded, in line with the average of the last 30 days.

Like other banks, Unicredit also benefited from the positive indications from the bond front.
The BTP-Bund spread closed sharply, stopping at 201.2 basis points, down 4.55%, while the 10-year BTP yield fell 2.16% to 1.589%.

Unicredit rejected by Jp Morgan

Unicredit has not been affected in any way by the rejection arrived from JP Morgan, whose analysts have revised their strategy from “overweight” to “neutral”, with a target price reduced from 12 to 9 euros, a value that in any case offers margins of increase compared at current stock market prices.

The US bank says that Unicredit’s re-rating is limited by uncertainties on asset quality, challenges for profitability and fears about the long-term sustainability of Italy’s debt.

Unicredit: strengths and weaknesses

Analysts point out that Unicredit has a more resilient loan book and capital, while stressing that management has been one of the most proactive in strengthening the balance sheet.

However, this does not mean that for Unicredit there is still uncertainty about the size of credit losses and the speed of the recovery, without forgetting that the default rates in Italy could still be decidedly higher despite the state guarantees scheme.

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