Credit Suisse - A 'New Company Is Emerging,' Says BofA While Upgrading Stock

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  • BofA Securities upgraded Credit Suisse Group AG CS to Buy from Neutral with a CHF 3.60 price target suggesting more than 20% upside potential. 
  • BofA analyst sees the rebuilding of Credit Suisse as "taking time." However, the bank's CHF 12 billion market cap is the same as Julius Baer's despite Credit Suisse being one-and-a-half times larger in wealth management and having a leading domestic bank and asset management business. 
  • The analyst said that with Europe's "lowest price/book," he sees the shares trading at an "attractive" level.
  • In October, Credit Suisse enlarged the banking syndicate underwriting the rights issue and announced the reference price for the proposed CHF4 billion capital raise.
  • Qatar Investment Authority and Saudi National Bank announced participation in the share placement.
  • The analyst writes that decision to exit investment banking creates the potential for a bank with half the balance sheet and, as a result, a much lower capital and debt requirement. 
  • New Credit Suisse is focused on its lower-risk, high-market-share wealth and Swiss banking businesses. 
  • Last Month, Credit Suisse expected its investment banking business and the group to report a loss before taxes of about CHF 1.5 billion for its fourth quarter
  • BofA expects its business exits to create free capital, with as much as CHF 9 billion available ultimately for distributions.
  • Price Action: CS shares are up 1.96% at $3.39 on the last check Friday.
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