Société Générale: tops CAC as JPMorgan sees potential

(CercleFinance.com) - On Tuesday morning, Société Générale shares were the best performers in the CAC 40 index, in the wake of positive comments from JPMorgan, which upgraded the stock.


At around 11:15 a.m., the stock was up over 2.5%, compared with a gain of just 0.1% for the CAC.

In a report this morning, JPMorgan stated that it has upgraded the stock from 'neutral' to 'overweight', also raising its target price from E29 to E46.

The broker justified its better stance by the improvement in SG's profitability, and by the payout that it is proposing to its shareholders - factors which, in their view, could well prolong the current appreciation in the share price.

JPMorgan acknowledges that SocGen shares have already performed strongly over the last four months, thanks to improved capital visibility and better communication, but above all to the appointment of a new CFO and his message on shareholder payouts, both of which have surprised us.

With a valuation of 5.6x earnings deemed "undemanding", the market is, in its view, underestimating the positive momentum driving business in corporate and investment banking, the improvement in BoursoBank's profitability and the strengthening of its asset quality.

As a result, analysts see potential for further upside due to the upward revision of market earnings forecasts and an increase in distributions to shareholders.

With today's rise, SG shares are up over 42% since the beginning of the year.


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