On Monday, Citi maintained a Buy rating on Julius Baer Group Ltd . (BAER:SW) (OTC: OTC:JBAXY) and increased the price target to CHF61.40 from CHF60.00. The adjustment follows a positive market reaction to the company's interim management statement, which saw a roughly 6% increase in share price. The analyst attributed the stock's performance primarily to better-than-expected net new money (NNM) flows and investor positioning, noting that many investors had been cautious ahead of the results.
The earnings per share (EPS) estimates for Julius Baer (SIX:BAER) were slightly modified, with a 4% decrease for the year 2024 due to lower earnings and a 1% to 2% adjustment for the years 2025 to 2028. The changes in EPS projections are a result of increased profits from a 2% rise in assets under management (AUM) and revenues, which are balanced by a higher share count. The firm has postponed the share buyback program (SBBs) to 2026 because of a shortfall in capital at the end of October and a larger-than-expected impact from Basel III regulations.
The new price target of CHF61.40 reflects modestly higher medium-term earnings expectations. The analyst pointed out that Julius Baer's valuation appears reasonable, trading at less than 8 times its projected 2026 earnings per share, excluding surplus capital. This valuation is 25% below its historical average. Additionally, a potential strategic update in the first half of 2025 is anticipated to offer greater clarity and could serve as a positive catalyst for the stock.
Julius Baer's shares are considered attractive due to several factors, including an expected 8% per annum total yield over the years 2025 to 2027 with the possibility of mergers and acquisitions. Furthermore, the company is poised for solid organic growth with approximately 4% net new money growth. The firm is also expected to benefit from a recovery in higher risk appetite and re-leveraging, according to the analyst's comments.
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