Market specialists refrain from setting downward limits on the bank's market valuation as its shares go from one record low to another.
Credit Suisse shares just managed to close about the 2 franc threshold on Monday when they ended the day at 2.12 francs. During the trading session, however, they continued to plumb new record lows.
This is after the bank's shares reached a record low of 2.41 francs just this past Friday. The truth is that right now, it is not unusual to see price fluctuations of more than 10 percent in daily trading. Indeed, Switzerland's second-largest bank's current market capitalization is around 9.83 billion francs ($10.75 billion), or about one-fifth of the intrinsic value of the shares.
For once, the decline was not its own fault. Bank shares worldwide are suffering from the failure of Silicon Valley Bank (SVB), which has prompted action by US regulators in order to prevent contagion and a large-scale banking crisis.
High Price Targets
Other Swiss banking shares have also been affected, with UBS, Julius Baer, and EFG International all posting single-digit percentage losses on Monday. Still, Credit Suisse was down by more than 14 percent.
The question remains. How far can Credit Suisse shares fall and is there any kind of downward limit? finews.com asked a number of market specialists that follow the bank, all of whom asked to remain anonymous. They indicated that they had published price targets and recommendations for Credit Suisse but none of them wanted to set any kind of firm downward band for the share price. A predominant majority of the 12 analysts stated a medium-term price target of 3.70 francs and recommended holding the shares.
Considered Scenarios
One market observer who has a price target of more than 3 francs says it is hard to find a fair value for Credit Suisses shares right now. Given the restructuring steps the bank is taking and this new, unexpected stress test out of the Americas, it is practically impossible to find a tangible point to model against.
«We are forced to work with scenarios», the analyst indicated. These range from full collapse to complete recovery by 2025. «The shares have become a highly risky investment and that is being reflected in the equity market», the analyst said. Any response to the question as to how low the shares can go would not be a satisfactory one in the current situation given it hinges on the scenario involved.
Golden Opportunity
Credit Suisse's leadership, however, now has two golden opportunities to counteract the uncertain sentiment in the markets. On Tuesday, it is expected to present at an investor conference held by competitor Morgan Stanley about the progress it is making. Participants are likely to closely listen to any comment related to client flows given the events in the last three months of 2022, when it recorded significant net outflows.
Also, its annual report might have been delayed last week at the last minute – but it has not been forgotten as finews.com previously indicated and extensively commented on last week.
It might be published as soon as this Tuesday. Traditionally, annual disclosure materials have been used to comment on current business. In Credit Suisse's case, and given the current situation, bad news would be better than no news at all.
