What To Expect From Credit Suisse Stock?

CS: Credit Suisse logo
Credit Suisse

Credit Suisse’s stock (NYSE: CS) has lost approximately 29% YTD, as compared to the 3% rise in the S&P500 over the same period. Further, CS stock is currently trading around $2 per share, which is 14% below its fair value of just below $3 – Trefis’ estimate for Credit Suisse’s valuationThe Swiss bank missed the consensus estimates in the fourth quarter of 2022, with net revenues declining by 36% y-o-y to $3.18 billion. It was mainly because of a 74% drop in the investment bank division, followed by a 23% decline in the Swiss bank and a 21% decrease in the wealth management units. Further, the firm posted a net loss of $1.45 billion – down 36% y-o-y (Note – Credit Suisse originally reports in CHF (Swiss Francs), the same has been converted to USD for ease of comparison).

The bank’s top line decreased 37% y-o-y to $15.64 billion in FY 2022. It was mainly due to a 55% decline in the investment bank, coupled with a 33% decrease in the wealth management division. Further, the Swiss bank revenues were reduced by 9% in the year. Notably, the firm announced a restructuring plan at the start of the fourth quarter. It incurred a restructuring expense of $559 million in FY2022. Overall, the adjusted net income decreased from -$1.81 billion to -$7.65 billion.

The bank’s stock price has seen very high volatility over the last week. It was partly because of the collapse of the Silicon Valley Bank (SVB), and partly due to the reports that Saudi National Bank is not considering infusing any more capital into the distressed wealth management giant. Moving forward, Credit Suisse’s revenues are forecast to remain around $15.98 billion in FY2023 and $16.13 billion in FY2024. Additionally, adjusted net income is likely to be approximately $1.2 billion in 2024. This coupled with an annual EPS of $0.42 and a P/E multiple of around 6x will lead to a valuation of $3.

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 Returns Mar 2023
MTD [1]
YTD [1]
Total [2]
 CS Return -30% -29% -85%
 S&P 500 Return 0% 3% 77%
 Trefis Multi-Strategy Portfolio -2% 5% 230%
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[1] Month-to-date and year-to-date as of 3/17/2023
[2] Cumulative total returns since the end of 2016

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