UBS has re-rated Valiant Holding AG to neutral from buy, upgrading its 12-month price objective to CHF168 from CHF155, but concluding that market gains and the bank's capital distributions have already reflected much of the company's operational progress and shareholder-return prospects.
Valiant's shares have posted substantial gains, rising 42% in 2025 and a further 11% year-to-date in 2026. Those moves outpaced the Swiss banking sector's 2% rise and the broader market's 4% gain over the same period.
As of Feb. 20 the stock was trading at CHF168.20, slightly above UBS's CHF168 price target. UBS's 12-month target implies essentially flat total price return from the current level once a forecast dividend yield of 4.8% is included, producing a modeled total stock return of 4.6% - marginally below UBS's assumed market return of 4.9%.
Quarterly performance and capital actions
UBS highlighted a fourth-quarter 2025 performance that beat consensus on net interest income, delivering a 5% upside versus street estimates, while net fee and commission income rose 6% year-on-year in the same period. The brokerage summarized the picture as: "Operating trend improvements, payout potential priced, NII resilience priced."
Valiant closed 2025 with a CET1 ratio of 17.2%, 70 basis points above consensus and 10 basis points higher than UBS had expected. That capital position supported the announcement of a CHF75 million share buyback program with a three-year execution window alongside the full-year results.
UBS models scope for further buybacks of CHF20-30 million annually in 2027, 2028 and 2029 as a mechanism to keep the CET1 ratio near the upper end of management's 15%-17% target range. Including dividends and buybacks, UBS projects a total distributed yield of 5.5% under its assumptions.
Income drivers, profitability outlook
The brokerage notes resilience in net interest income, underpinned in part by a swap portfolio UBS estimates contributes roughly 15% of NII, combined with falling funding costs. Despite those supportive dynamics, UBS cautions that materially pushing adjusted return on equity above 7% will be difficult in a zero or potentially negative rate environment.
UBS's adjusted RoE forecasts are 6.9% for 2026, 7.2% for 2027 and 7.5% for 2028.
Analytically, UBS has increased its adjusted EPS forecasts for 2026, 2027 and 2028 by 3%, 8% and 13% respectively, attributing the upgrades to stronger swap income and fee generation. On a relative basis, UBS's adjusted EPS projections sit 8% and 14% above consensus for 2026 and 2027 respectively. The firm models adjusted EPS of CHF13.15 for 2027 versus a consensus figure of CHF11.12, and adjusted net income of CHF202.6 million versus a consensus CHF178 million.
Valuation framework
UBS's valuation places Valiant at 12.8 times 2027 adjusted EPS and 0.9 times 2027 price-to-tangible net asset value, which corresponds to a modeled 2027 adjusted return on tangible equity of 7.2%. The broker derived the CHF168 fair value using a single-stage Gordon Growth Model with an 8% cost of equity and a 1% terminal growth rate.
Company targets and medium-term forecasts
Per company disclosures cited by UBS, Valiant's 2025-2029 strategic objectives include annual loan growth above 2%, fee and commission growth above 5% annually, a cost-to-income ratio below 55%, an RoE above 7% and a growing dividend.
UBS projects net interest income of CHF407 million for 2026, rising to CHF432 million by 2028. Total revenues are forecast to reach CHF600 million by 2028, up from UBS's CHF560 million projection for 2026.
On costs, UBS models a gradual efficiency improvement, with the cost-to-income ratio falling from a projected 54.6% in 2026 to 52.5% by 2028. For context, consensus estimates place the 2027 C/I ratio at 56.8%.
Conclusion
UBS's repositioning to neutral reflects the brokerage's view that Valiant's share-price appreciation and proposed capital distributions have already captured much of the upside embedded in the bank's improving operating trends and capital strength. While UBS has raised earnings estimates and lifted its fair value, the updated recommendation signals limited expected outperformance relative to the firm's market-return benchmark.