Source : investing, 1/11/2024
An analyst at Morgan Stanley on Friday upgraded the stock rating of Societe Generale SA (GLE:FP) (OTC: SCGLY) from “equal weight” to “higher weight”, raising the price target to 36.00 euros, up from the previous 29.00 euros. This upgrade was based on the bank’s performance in the third quarter, which was a significant achievement for the company.
Societe Generale managed to maintain its guidance on French retail net interest income during the quarter, beating expectations of net interest income 2% higher than Morgan Stanley’s estimate. This positive result led to an optimistic outlook for the bank’s net interest income growth in 2025.
which is expected to challenge the projected decline of 2% on average across other banks covered in the Eurozone.
The bank’s performance was attributed to several factors, including the systematic repricing of the mortgage portfolio.
the halt to the shift in the deposit mix towards term deposits.
and an expected decline in Livret A rates in February. These elements contribute to the Bank’s ability to excel in a challenging economic environment.
Morgan Stanley’s Operating Profit Before Provisions (PPOP) forecast at Société Générale’s French retail for 2025-26 is about 6% higher than the consensus forecast.
However, the company maintains that its estimates are conservative, taking into account an annual growth in net interest income of just €400 million.
which only reflects the absence of hedge impact. There is potential for additional gains if demand deposits begin to increase again.
The upgrade and the new target price reflect confidence in Societe Generale’s ability to navigate the current financial landscape and its potential for continued growth in the years to come. The bank’s ability to maintain guidance and exceed estimates in the third quarter was a critical factor in Morgan Stanley’s reassessment of the stock outlook.
In other recent news, Society Generale has undergone significant changes. The bank faced a significant decline in the STOXX European Banks Index.
contributing to its biggest weekly loss since March 2023. This decline was exacerbated by a 2.1% drop on Friday, following a 4.5% decline on Thursday.
Shares of Societe Generale fell 8% after the bank announced a reduction in net interest income guidance for its French retail operations. Additional losses on Friday sent stocks to their lowest level since October.
City lowered the Societe Generale share forecast from “buy” to “neutral”.
with the target price adjusted to €26.00, down from the previous €33.00. The ongoing challenges in the French retail sector and the bank’s unclear recovery trajectory caused this reduction. Despite these developments, the valuation of Societe Generale shares remains a point of interest due to its potential attractiveness with profitability improvements.
These events are part of recent developments affecting Societe Générale.
with a cumulative impact that has led to a loss of nearly $100 billion in European banks’ market value in just one week, according to LSEG data.
Following Morgan Stanley’s upgrade to Societe Generale SA (OTC: SCGLY).
InvestingPro’s data provides additional context for the bank’s financial performance and market position. The P/Share ratio of 0.28 as of the second quarter of 2024 is in line with InvestingPro’s advice that SCGLY “is trading at a low price/book value multiplier”.
which could indicate an undervalued stock and support Morgan Stanney’s optimistic outlook.
The bank’s profitability is evidenced by the operating income margin of 22.21% over the past twelve months.
and InvestingPro’s advice confirms that the company has been “profitable over the past twelve months.” This profitability, coupled with the fact that SCGLY is “trading near the 52-week high”.
reflects positive market sentiment, which is in line with Morgan Stanley’s upgrade..
Investors should note that SCGLY has shown a strong performance recently.
with an overall price return of 22.49% over the past three months. This is in line with InvestingPro’s advice highlighting a “strong return over the past three months”.
suggesting momentum that could support the new rating of ‘highe rweight'”.
For those seeking a more comprehensive analysis, InvestingPro offers 13 additional SCGLY tips.
providing a deeper understanding of the company’s financial health and market position.
