Key insights
- Morgan Stanley downgraded Intesa SanPaolo due to limited growth prospects, despite not trading at demanding multiples. While raising EPS estimates slightly for 2026 and 2027, they cut the 2028 estimate. The bank projects future rate hikes and net interest income. The downgrade reflects concerns about the bank's growth profile, which could have a minor negative impact on the broader European financial sector, indirectly influencing US markets.
Investing.com -- Morgan Stanley downgraded Intesa SanPaolo (BIT:ISP) to “equal-weight” from “overweight” on Monday, trimming its price target to €6.60 from €6.80, as the bank cited limited growth prospects and an absence of near-term catalysts.
Intesa shares closed at €5.81 on May 8, leaving 13.5% upside to the new target. The bank’s bull case stands at €7.60 and bear case at €5.10.
"Despite not seeing ISP trading on demanding multiples, we think the limited growth profile and the lack of catalysts ahead will continue to weight on the stock," analyst Noemi Peruch said.
Morgan Stanley lifted its 2026 EPS estimate by approximately 1% to €0.56 and its 2027 EPS estimate by approximately 1% to €0.63, driven primarily by higher trading revenues and, to a lesser extent, net interest income. The brokerage cut its adjusted 2028 EPS by 1% to €0.68, mainly on higher AT1 coupons.
Morgan Stanley expects a 25bp rate hike in June 2026, a further 25bp hike in September, then rate cuts in June and September 2027 to 2%.
Net interest income is projected at €15.22 billion in 2026, €16.04 billion in 2027 and €16.30 billion in 2028.
Fee and commission income is projected at €10.37 billion, €10.80 billion and €11.25 billion for 2026, 2027 and 2028 respectively. The 2028-29 NII target could increase by €500 million with the current forward rate curve, implying a 1% upgrade to 2029 Visible Alpha consensus.
Operating profit is projected at €17.09 billion for 2026, with a cost-to-income ratio reaching 37% in 2028, in line with the company’s stated target. Morgan Stanley’s net profit estimates are 1.5%, 3.4% and 2.6% above Visible Alpha consensus for 2026, 2027 and 2028 respectively.
The stock trades at 10.3x 2026E P/E and 9.2x 2027E P/E. Return on average tangible equity is projected at 21.5% in 2026, 23.4% in 2027 and 24.2% in 2028.
Dividend yield is projected at 7.6% in 2026, rising to 8.5% in 2027 and 9.1% in 2028. The price target is based on a SOTP/Gordon growth model assuming a 12% cost of equity and 1% growth rate.