Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

On Nov 18, 2013, we downgraded our recommendation on Deutsche Bank AG (DB - Analyst Report) to Neutral from Outperform based on the disappointing third-quarter results. Results were adversely affected by litigation related expenses. Moreover, the regulatory reforms and an unsettled global economy might act as deterrents going forward.

Rationale Behind Downgrade

Deutsche Bank reported disappointing results in the third-quarter of 2013 aided by high legal expenses. Net income stood at €51 million ($67.5 million), substantially down from €754 million ($998.6 million) in the prior-year quarter. Additionally, the performance was also affected by rise in expenses and lower revenues.

With continuously rising non-interest expenses, the company is exposed to operational risks. Expenses surged at a CAGR of 11.3% over the last 5 years (2008–2012). Moreover, non-interest expenses increased 1% year over year in the first nine months of 2013. Continuation of such a trend will remain a hindrance for bottom-line growth.

Due to the nature of its business, Deutsche Bank is involved in litigation, arbitration and regulatory proceedings in Germany and a number of jurisdictions outside Germany. Such matters are subject to many uncertainties. Though the company has resolved a number of important legal matters and made progress on others, we expect the litigation environment to continue to be challenging.

For Deutsche Bank, over the last 30 days, the Zacks Consensus Estimate for 2013 decreased 2.3% to $5.85 per share, while it declined 1.3% to $6.82 per share for 2014. Currently, Deutsche Bank carries a Zacks Rank #3 (Hold).

Other Stocks to Consider

Some foreign stocks that are currently performing well include Westpac Banking Corporation (WBK), Banco Santander, S.A. (SAN - Snapshot Report) and Itau Unibanco Holding S.A. (ITUB - Analyst Report). All 3 companies carry a Zacks Rank #1 (Strong Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GRP IN DXYN 15.84 +7.90%
BOFI HLDG IN BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%