UBS shares down significantly despite dividend increase
Published: Tuesday, Feb 6th 2024, 10:10
Updated At: Tuesday, Feb 6th 2024, 10:59
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UBS shares started trading on Tuesday at significantly lower prices. While the result for the final quarter of 2023 is characterized by light and shade, Switzerland's largest bank can score points with its generous dividend policy.
There is talk of profit-taking in the trade. Analysts see further potential in the longer term.
At 9.50 a.m., UBS shares lose 2.7 percent to CHF 25.00 in a slightly weaker overall market (SMI -0.3%), the daily low is still slightly lower. Among other things, the market is pointing out that UBS shares have gained over 50 percent in the past year and have already anticipated many positive developments.
According to analysts' comments, UBS's slightly lower than expected operating income in the quarter under review was offset by a sharp rise in operating expenses, with one-off factors being primarily responsible for the latter. This in turn had an impact on the pre-tax result and consolidated result, they say.
Further savings efforts
The increased costs are also the most important negative point in the first comments, with reference also being made to the bank's continued or extended cost-cutting efforts. The fourth quarter result was disappointing in terms of costs, according to analysts at RBC, for example. However, the target of higher gross savings by 2026 should provide some comfort that costs will remain under control.
Bank Vontobel also mentions the disappointing development in costs. At the same time, however, it also states that UBS has made significant progress in restructuring and has increased or specified its cost target.
Meanwhile, ZKB sees new money as positive. Although the momentum has slowed somewhat compared to the previous quarter, the management is talking about continued strong momentum, which should also reflect the win-back strategy.
However, the focus is clearly on the capital distribution news. UBS intends to increase its annual dividend by 27% to USD 0.70 per share, which exceeds even the boldest analyst estimates and is therefore mentioned positively by most observers. And the fact that the bank intends to return the same amount of money to shareholders via share buybacks by 2026 as before the CS takeover is also receiving positive attention.
In principle, market participants continue to see good opportunities for the shares in the medium term. "The current valuation of the share offers considerable upside potential if UBS is able to achieve its long-term financial targets," says Vontobel, for example, which recommends the share as a 'buy' with a target price of CHF 26.50. RBC and ZKB also see further upside potential, which is underlined by the corresponding 'outperform' and 'overweight' recommendations.
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