Why Does BofA Analyst Like Deutsche Bank Stock?

Deutsche Bank AG DB is poised to benefit from interest rate hikes and market volume growth, according to BofA Securities.

The Deutsche Bank Analyst: Rohith Chandra-Rajan upgraded the rating for Deutsche Bank from Underperform to Neutral, while raising the price target from $10 to 11.50.

The Deutsche Bank Thesis: Following two years of outperformance by the Investment Bank segment, the Corporate Bank and Private Bank revenues are now expected to grow, with rate and volume tailwinds, Chandra-Rajan said in the upgrade note.

“Deutsche Bank’s focus is on prospects for improved profitability in the traditional banking businesses,” the analyst wrote. “We expect this to be visible in revenues and earnings,” he added.

Deutsche Bank’s strategic initiatives “are the major driver of planned growth in the Investment Bank and also significant for the Private Bank and Corporate Bank,” Chandra-Rajan mentioned. He added that the additional income of 1.8 billion euro from new strategic initiatives “will be harder to achieve and sustaining, let alone growing.”

DB Price Action: Shares of Deutsche Bank had declined by 0.16% to $12.26 at the time of publication Monday.