DB - Deutsche Bank May Knock Q1 Estimates Out Of The Park
2024-04-17 09:11:21 ET
Summary
- Deutsche Bank's stock could see an aggressive share price re-rating toward $35 due to positive momentum and upgraded strategic targets.
- The dovish shift in monetary policy sets a bullish backdrop for investment banking activities.
- Looking at Q1 2024, I expect that Deutsche Bank's results smash consensus estimates.
- I estimate that Deutsche Bank's revenue from the investment bank could jump by €300-400 million YoY, bringing total revenues to about €8.1 billion.
- On the bottom line, I expect profits to be up ~40% YoY, at €2.6-2.8 billion, vs. €2.2 billion consensus.
Following Deutsche Bank's ( DB ) results for the fourth quarter of 2023, I have assigned a "Strong Buy" rating, arguing that the bank's stock could be poised for an aggressive share price re-rating toward $35 on the backdrop of positive momentum due to several key factors (emphasis newly added):
Deutsche Bank May Knock Q1 Estimates Out Of The Park... Supported by strong commercial momentum, especially in DB's fee income business over the past few quarters, Deutsche Bank management finally felt comfortable to upgrade its strategic targets for the "Global Hausbank initiative": Specifically, Deutsche Bank now expects a revenue CAGR of approximately 5.5% and 6.5% through 2025 , bringing total revenues for the bank to about €32 billion. Notably, the new revenue guidance is about €2 billion ahead of consensus.
In addition, management now expects cost estimations for the FY 2025 steady state at around €20 billion, adding €1.3 billion worth of annual savings due to various already completed initiatives. The implication of these target adjustments may suggest about €10 billion of pre-tax profits by 2026 , compared to a market capitalization of €26 billion currently.