Overview
Kepler Cheuvreux has moved Banca Generali up to a Buy rating from Hold and increased its target price to €61.50 from €60 following the bank's 2025 results, which the broker described as stronger than expected. The announcement accompanied a share-price rise of over 3%.
Quarterly performance that prompted the upgrade
The broker said the fourth-quarter results supported the change in recommendation. Banca Generali posted a 42% year-on-year increase in net profit to €131 million. That headline figure was supported by a €39 million tax recovery and a 7.4% rise in recurring net profit to €89 million. Kepler Cheuvreux noted that, after excluding the one-off tax item, net profit aligned with expectations, while operating performance outperformed forecasts.
Revenues for the period rose 8% year-on-year to €278 million, which beat consensus by 7% and Kepler Cheuvreux's own estimate by 10%. Net interest income increased 2.5% to €82 million. Net commissions expanded by 11% to €185 million, with recurring fees up 16% to €123 million and variable fees down 2.6% to €43 million.
On the cost side, operating expenses grew 30% to €109 million, a rise Kepler attributed to the consolidation of Intermonte and increased investment spending. Gross operating profit slipped 3% to €169 million but remained 8% above consensus. The bank also recorded €49 million in provisions for other risks, and reported a full-year cost-income ratio of 36%.
Guidance and midterm targets
Banca Generali provided targets for 2026 that include net inflows above €6.5 billion and more than €4 billion in assets under management. The bank forecast net interest income of €330-340 million for 2026, compared with €325 million in 2025. Management expects the management fee margin to remain at 140-142 basis points, core costs to rise by 6-8%, and Intermonte to generate €10-15 million in revenue synergies.
Analyst model updates and valuation
Following the results and guidance, Kepler Cheuvreux raised its adjusted earnings per share forecasts. The broker lifted its 2026 EPS estimate to €3.21 from €3.01, its 2027 estimate to €3.38 from €3.20, and its 2028 estimate to €3.58 from €3.43.
The new €61.50 price target is derived from a three-stage dividend discount model that uses an 8.6% cost of equity, a 3% risk-free rate, a 7% market risk premium and a 0.8 beta, together with a 2.5% perpetual growth rate. Kepler Cheuvreux's calculation incorporates excess capital against a 13% CET1 threshold and produces an aggregate equity value of €7.08 billion, equivalent to €61.50 per share.
Market reaction and management comments
The broker described the market's sell-off as unjustified and specifically flagged what it regarded as an excessive reaction to concerns about artificial intelligence. Company management emphasized to investors that the firm's business depends on trust and confidentiality, and said that AI should be treated as a tool to support advisers rather than replace them.
Key takeaways
- Kepler Cheuvreux upgraded Banca Generali to Buy and increased its target price to €61.50 after better-than-expected 2025 results.
- Fourth-quarter metrics included a 42% rise in net profit to €131 million, revenues up 8% to €278 million, and operating performance that beat consensus.
- Guidance for 2026 includes net inflows above €6.5 billion, NII of €330-340 million, a management fee margin of 140-142 bps and core cost growth of 6-8%.
Context for investors
The upgrade reflects a combination of a stronger quarterly operating showing, revenue beats, reiterated medium-term targets and revised analyst forecasts and valuation inputs. Kepler Cheuvreux's valuation approach places weight on dividend discount modeling, capital excess over regulatory CET1 thresholds, and the updated EPS trajectory for 2026-2028.