Analysts Are Bearish on Deutsche Bank Despite Cheap Valuations


Apr. 26 2016, Updated 6:07 p.m. ET

Performance review

Deutsche Bank has been under fire in the past year. Shares of the company have fallen 27% so far in 2016 and 47% in 2015.

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Analysts’ price target and ratings

With an average consensus price target of 22.28 euros and a median target estimate of 21.26 euros, Deutsche Bank is still at a discount of 16% to analyst expectations. Among the 39 analysts following the stock, only seven have assigned the stock a “buy” rating. Eight have given it a “sell” rating, and 24 have given it a “hold” rating.

Deutsche Bank has been the focus of anxiety for the European banking system (EUFN). The company has announced its first full year of loss since the 2008 recession, and CEO (chief executive officer) John Cryan is trying hard to turn the bank around.

There are concerns about the bank’s ability to fulfill payments on its convertible bonds due in April 2016. There are also concerns about declining trading and investment banking revenues. These have led to questions about the bank’s profitability. Given the dismal performance, we may see more analysts turning bearish on the stock. Cryan has been under pressure to overhaul the bank after litigation expenses and the market rout in Asia pushed the bank’s valuation much lower than its rivals.


Deutsche Bank shares are trading at a price-to-book multiple of 0.35x, Large-cap peers such as the Royal Bank of Scotland (RBS), Credit Suisse (CS), and Barclays (BCS) are trading at a premium compared to Deutsche Bank.


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