Goldman Sachs has reshaped its stance on two major Iberian lenders, lowering its recommendation on Banco Comercial Portugues (Millennium bcp) and opening coverage of Banco de Sabadell with a negative view. The Wall Street bank said both names now offer only limited upside after notable share-price advances earlier this year.
The bank cut Millennium bcp to Neutral from Buy and set a 12-month price target of €1.10. BCP shares dropped about 4.3% on the Lisbon exchange following the move, though the stock remains roughly 14% higher year-to-date.
Analysts at Goldman, led by Sofie Peterzens, highlighted the extent of BCP’s recent outperformance. The stock has risen roughly 26% since being placed on Goldman’s Buy list on December 4, 2025, outperforming the FTSE World Europe index - which gained about 13% over the same period - and the SX7P European banks index, which climbed around 23%.
That rally, Goldman said, has lifted Millennium bcp’s valuation to about 12.5 times 12-month forward consensus earnings. That multiple sits above both the bank’s five-year historical average and Goldman’s European banks coverage average of 10.8 times.
"We view this valuation as broadly fair, with consensus estimates also largely in the right place over 2026-28E," the analysts wrote, while noting they now model BCP’s return on tangible equity (ROTE) at above 16% over the medium term.
Goldman attributed much of BCP’s outperformance to growth in net interest income - largely driven by lending volumes - and to a reduction in provisions linked to Swiss franc mortgage litigation in Poland. The bank expects those provisions to decline to around €200 million in 2026 from €519 million in 2025.
At the same time, Goldman trimmed its earnings-per-share forecasts for Millennium bcp by 2%-4% across 2026-28E, primarily reflecting lower fee income expectations.
On Sabadell, Goldman initiated coverage with a Sell rating and a 12-month price target of €3.10. The analysts acknowledged Sabadell’s "strong SME franchise, resilient domestic operating environment and attractive capital return profile" following the sale of its British unit TSB to Santander for £2.9 billion, but said those positives are largely reflected in the current share price.
Sabadell’s stock fell about 3.3% after the initiation. Goldman noted the bank trades at roughly 10 times 12-month forward consensus earnings - a modest premium to the firm’s European banks coverage average despite projections for softer medium-term earnings growth.
The initiation flagged several structural considerations for Sabadell: limited revenue diversification, an above-domestic-peer cost-to-income ratio, and forecasted earnings growth below 8% annually through 2028 versus a coverage average near 12%. Goldman projects Sabadell’s ROTE at around 14%, roughly 200 basis points below peers.
Taken together, Goldman’s moves reflect a view that recent share price strength has already priced in much of the anticipated improvement in earnings and capital returns for both lenders, constraining further upside from today’s levels.