On Wednesday, CFRA raised the price target on ABN Amro shares (ABN:NA) (OTC: ABNRY) to EUR18.00 from EUR12.00, while maintaining a Sell rating. The adjustment reflects a price-to-book (P/B) ratio of 0.68 times, which is below the peer average of 0.83 times. This valuation is supported by ABN Amro's relatively weaker return on equity (ROE) profile compared to its peers.
The firm has also increased its earnings per share (EPS) forecasts for ABN Amro to EUR2.35 from EUR2.20 for 2024 and to EUR2.40 from EUR2.30 for 2025. The revisions come after ABN Amro reported a 29% year-over-year increase in net profit for the first quarter of 2024, totaling EUR674 million. This figure surpassed the consensus estimate of EUR493 million compiled by the company.
The robust financial performance is attributed to several factors. There was a 6% increase in fee income, which was driven by higher transaction volume and asset management-related fees.
Moreover, other operating income saw a significant rise, coming in at EUR139 million compared to EUR78 million in the previous year, due to improved asset and liability management results and fair value gains. The bank also experienced a reduction in operating expenses by 11%, largely due to decreased regulatory fees.
CFRA's updated outlook on ABN Amro is influenced by the resilience of the Dutch economy and the anticipated recovery of the property market in the Netherlands. The analyst believes that ABN Amro's strong fee income performance positions it well to navigate the potential headwinds from anticipated interest rate cuts.
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