Unicredit share price analysis as earnings growth continues
Unicredit share price has pulled back in the past few weeks, moving from a high of €69.54 in August to the current €63. It remains about 70% above its lowest level this year. So, is this a good bank stock to buy after its earnings?
Unicredit publishes strong earnings
The UCG share price has remained in a tight range in the past few weeks, but this may change now that the company has published strong financial results that demonstrated that Andrea Orcel’s strategy was working.
The company’s net revenue rose by 1.2% in the third quarter, leading to a net profit of €2.6 billion. Total revenue jumped to €6.2 billion, higher than what analysts were expecting.
Most notably, the firm maintained its guidance of an annual profit of about €10.5 billion, which will be its best year ever. It then expects to distribute about €9.5 billion to shareholders in the form of dividends and buybacks. In his statement, Orcel said:
“By accelerating our strategy and deploying excess capital to create value, we have bolstered our best-in-class earnings and shareholder distribution trajectory.”
Unicredit has done well under Orcel, who became CEO four years ago. It stock has jumped by over 1,000% from its lowest level in 2021, beating most of its European counterparts.
The company has continued growing its revenues and profits as it benefited from the relatively high interest rates in the region. At the same time, Unicredit has cut costs, exited some of the low-performing businesses, and reallocated capital to more profitable areas.
Unicredit has also announced some major corporate moves to boost its performance. It acquired a large stake in Alpha Bank, a top player in the Greece banking sector.
Orcel’s defining deal will be his pursuit of Commerzbank, the second-biggest bank in Germany with a market cap of over $39 billion. He has already acquired about 28% of the company and is seeking a full takeover, which will create a juggernaut with over €1.46 trillion in assets.
This deal remains in limbo because of the growing opposition from German politicians. Orcel expects to make a final decision on the pursuit in 2027.
Unicredit share price technical analysis
The daily chart shows that the Unicredit stock price peaked at €69.86 in August and then started a slow downtrend, reaching a low of €60.80 on October 14. This downtrend resulted in a descending channel, in a sign that it has formed a bullish flag pattern.
The stock is consolidating at the 50-day and 100-day Exponential Moving Averages (EMA). Also, the Relative Strength Index (RSI) and the Percentage Price Oscilator have pointed downwards.
Technicals suggest that the UCG stock price will bounce back, and possibly hit the year-to-date high of €69.86, which is about 10% above the current level. A move above that price will point to more gains, potentially to €75 and above.
Still, analysts are concerned about whether the surge in European bank stocks will continue now that the European Central Bank (ECB) has been cutting interest rates.
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