Should I buy Deutsche Bank shares after BoFa increased its target?

Deutsche Bank Aktiengesellschaft shares advanced 5% last week after the Bank of America upgraded Deutsche Bank to Neutral from Underperform.

BoFa increased its target on Deutsche Bank

Deutsche Bank entered 2022 ahead of a plan which is the result of consistent and focused execution and restructuring initiatives.

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According to the board of directors, all transformation-related effects are now behind Deutsche Bank, and the bank remains on the right path to a 70% cost to income ratio.

Deutsche Bank increased its outlook for 2022 and reported that it expects revenue of €26 billion in 2022, which represents an increase from the prior guidance of €25 billion.

It is important to say that all four banks’ core businesses performed at or ahead of the plan during 2021, and revenues for the full year totaled €25.4 billion. This represents an increase of 6% compared with the 2020 fiscal year, and Deutsche Bank reported a net profit of €2.5 billion for 2021, which is the bank’s highest full-year profit since 2011.

During its Investor Deep Dive event, Deutsche Bank unveiled 2025 targets for compound annual revenue growth of 3.5%-4.5% vs. 2021, with implied net revenue of ~€30 billion in 2025 and cost/income ratio below 62.5%. Christian Sewing, CEO of Deutsche Bank, added:

Over the past three years, we have built strong foundations for a resilient and sustainably profitable Deutsche Bank. Our strategy is now about shifting to sustainable growth and increased distributions to our shareholders.

Deutsche Bank started buying back stock under its up to €300 million program that will end it no later than April 27, 2022. Rohith Chandra-Rajan, an analyst from Bank of America Securities, has upgraded Deutsche Bank shares last week to Neutral from Underperform.

Analyst Rohith Chandra-Rajan increased his price target to €11.50 from €10.00 and said that he sees better Corporate Bank and Private Bank revenue offsetting higher costs and Russia-related writedowns.

Deutsche Bank has stopped conducting new business in Russia amid the country’s invasion of Ukraine and remains in the process of winding down its remaining business in Russia.

Chief Risk Officer Stuart Lewis said that credit exposures to Russia and Ukraine account for “a very small portion of the bank’s overall loan portfolio and are protected by a number of risk mitigants.

Technical analysis

Deutsche Bank shares advanced 5% in the last five trading days, and the current share price stands at €11.65.

The important support levels are €11 and €10; €12 and €14 represent the current resistance levels. If the price jumps above €13, it will signal trading Deutsche Bank shares, and the next target could be around  €14 resistance.

On the other side, if the price falls below €10 support, it would be a strong “sell” signal, and the next target could be around €8.

Summary

Rohith Chandra-Rajan, an analyst from Bank of America Securities, has upgraded Deutsche Bank shares last week to Neutral from Underperform. Deutsche Bank has stopped conducting new business in Russia while credit exposures to Russia and Ukraine account for “a very small portion of the bank’s overall loan portfolio and are protected by a number of risk mitigants.

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