On Friday, Barclays made an adjustment to its rating and price target for Skandinaviska Enskilda Banken AB (SEBA:SS) (OTC: SKVKY), downgrading the stock to Underweight from Equal Weight and reducing the price target to SEK124 from SEK126. The revision reflects a more cautious stance towards the bank's future financial performance.
The downgrade was prompted by concerns that market expectations for the bank's capital returns and net interest income (NII) for the fiscal years 2025-2026 might be overly optimistic. Barclays' analysis suggests that the consensus estimates do not align with the firm's projections, particularly regarding the bank's earnings per share (EPS).
Barclays has revised its EPS estimates for SEB downwards by 1-4% for FY25-26. This adjustment is attributed to anticipated lower buyback activities, reduced fee income, and increased expenses. The firm's EPS forecasts are now 8-9% below the consensus estimates for the same period.
A specific concern raised by Barclays is the potential extension of the Lithuania bank tax into the year 2025. The firm believes that this could lead to further downside risks to its EPS estimate for FY25. The new price target of SEK124 is set to reflect these lowered EPS expectations.
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