Barclays downgrades Unicaja citing stretched valuation after recent re-rating

Barclays downgrades Unicaja citing stretched valuation after recent re-rating

US concludes third round of strikes against Iran after Trump reinstates blockade Investing.com -- Barclays downgraded Unicaja Banco SA (BME:UNI) on Tuesday to “underweight” from “equal weight” rating, saying a recent re-rating has left the Spanish lender’s stock looking increasingly demanding on a price-to-earnings versus earnings-per-share growth basis, and raised its price target to €3.10 from €3. Barclays said the stock’s aggregate EPS growth for fiscal years 2026 and 2027 of 19% was somewhat below its broader coverage universe at approximately 22%, while the shares trade at 11.6 times 2027 estimated price-to-earnings, compared with a sector median of approximately 10.1 times.

"While we continue to view the operational outlook as broadly stable, with resilient asset quality, a strong capital position and limited downside risk to consensus earnings, we increasingly struggle to justify the current valuation," Barclays analysts said. The broker said Unicaja’s price-to-tangible book value appears broadly consistent with other Spanish banks, though ahead of the broader European banking sector, and acknowledged that a fiscal 2027 estimated dividend yield of approximately 6% is above the sector average of approximately 5%. Barclays also said that while takeover optionality remains part of the investment case, the recent re-rating has raised the economic hurdle for any potential transaction.

The increased size of the franchise makes a domestic acquisition more demanding from a capital allocation perspective, it added. On second-quarter 2026 expectations, Barclays forecast Unicaja net profit of €181 million, slightly below current Bloomberg consensus. It estimated net interest income of €381 million for the quarter, against Bloomberg consensus of €382 million.

Fee income is expected to remain broadly stable at around €136 million, equivalent to approximately 5% year-on-year growth. Barclays said Unicaja’s Common Equity Tier 1 ratio is expected to decline to 15.61% in the second quarter from 15.82% in the first quarter, with organic capital generation largely offset by dividend accruals and approximately 1% quarter-on-quarter growth in risk-weighted assets. The broker said it revised its estimates to reflect a more constructive net interest income outlook, assuming loan yields begin to recover earlier than previously expected and slightly higher volumes following upgrades to Spain’s GDP outlook, with those changes supporting earnings per share revisions of 4% on average over the next three years.