Bank of America ML upgrades UBS after FX settlement
Bank of America Merrill Lynch upgraded UBS to 'buy' from 'neutral' and lifted the target price to CHF23 from CHF20. It said the Swiss bank’s settlement with US authorities for its role in the manipulation of foreign exchange trading markets clears a major overhang on the stock.
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“Whilst UBS may still be exposed to European antitrust issues, we think the $545m combined settlement and immunity from the Department of Justice will be extremely well received,” said Bank of America.
It noted that the operating environment remains favourable and UBS had a strong first quarter.
“A clear strategy, a simple focus on growing profits in Wealth Management and a proven track record on adapting the business model to new regulations leave us more confident on UBS’ outlook,” the broker said.
BofA said that the second quarter appears to be holding up well, and this, along with the removal of the FX overhang, has prompted it to upgrade its earnings per share estimates slightly.
It now expects 2015 EPS of CHF1.51 versus a previous estimate of CHF149 and 2016 EPS of CHF1.77, up from CHF1.73.