For a safe investment in Italy, here is one security to buy and one to sell on the FTSE mib.
On the FTSE Mib there is only one stock to buy according to Deutsche Bank in the current economic context. The investment bank cut the target price to almost 30 European shares forecasting the new earnings season and the decisions on the state of the Italian economy by the three main rating agencies. One Italian bank, in particular, was downgraded to "hold". Let’s see the best strategies to invest in Italy right now, following Deutsche Bank’s recommendations.
Positive outlook for the utilities sector
The Deutsche Bank report begins with an analysis of the European public services sector. Despite recent cuts to price targets, the bank strikes a positive tone in its outlook. This may surprise some investors, considering the downward trend in price targets. However, Deutsche Bank argues that investors are overestimating the impact of rising bond yields and are becoming too pessimistic about the prospects for renewable energy.
Integrated utilities, such as RWE, Enel, SSE, and E.ON, receive particular attention from Deutsche Bank analysts. Despite a cut in the target price of Enel from 7.3 to 7.00 euro, the bank reiterates its "buy" rating on this stock. This suggests that despite the current challenges, Deutsche Bank believes these companies are well-positioned to face the future and offer growth opportunities to investors.
Italgas promoted by analysts
Deutsche Bank dedicated a good portion of its report to downgrades and cuts in price targets, but there is one exception. Deutsche Bank analysts raised their rating only on one company on the Piazza Affari: Italgas, the Italian natural gas company. Despite reducing the price target by 5%, from 6 to 5.7 euros, the bank promoted Italgas to "buy."
This decision is interesting, especially in a context where other stocks are being downgraded. It represents a clear expression of confidence in Italgas’ growth prospects by Deutsche Bank, despite the challenges and cuts to price targets influencing the market.
- Italgas - Weekly graph
- Source: TeleTrader
Graphically, the Italgas shares are attempting to react to the sales that began in April. The trend line that unites the lows of 2020 and 2022 seems to have offered a valid edge for buyers. However, in the 5.10 area, the first resistance has already slowed down growth ambitions. Beyond this reference, the movement could restart towards targets of 5.35 and 5.70 euros. Negative indications would instead arrive below 4.90, forecasting the return to the 4.70 area at least.
Italian banks: Fineco Bank rejected
Another key point highlighted in the Deutsche Bank document concerns Italian banks and the impact of rising interest rates. According to the investment bank, the increase in rates is going from being a supporting factor to an obstacle for Italian banks. This claim is based on the idea that higher bond yields are curbing client appetite for assets under management, leading to a “cash sorting effect”.
In particular, Deutsche Bank downgraded Fineco Bank to "hold", lowering the target price to 13.9 euros per share from the previous 16.1 euros, due to the "cash sorting" effect, the phenomenon whereby customers move uninvested money into cash-like investments, such as short-term government bonds or savings accounts. This phenomenon negatively affects the performance of Fineco Bank’s share price and is expected to remain negative in the coming months. This change in perspective highlights how important it is for investors to carefully monitor the development of interest rates and their impact on banks.
Original article published on Money.it Italy 2023-10-18 16:10:00. Original title: Un titolo da comprare e uno da vendere a Piazza Affari (secondo Deutsche Bank)
