Citi Upgrades EFG International to 'Buy' on Attractive Valuation After Share Price Drop

Citi has upgraded its rating on EFG International to 'Buy' from 'Neutral', citing a significant stock price decline this year that has created an attractive entry point for the Swiss private bank. The investment bank also raised its price target for EFG, suggesting a potential total return of over 16%.

Valuation De-rating Creates Opportunity

Analysts at Citi raised their price target on the Zurich-headquartered group to SFr18.80 from SFr18.00. According to the research note, this new target implies a total expected return of 16.6%, which combines a 12.2% share price return with a 4.5% dividend yield.

The upgrade is primarily based on the stock's recent performance. EFG's shares have fallen more than 13% year-to-date, leading to a valuation de-rating of over 15% to 10.5 times its estimated fiscal 2028 price-to-earnings ratio. EFG shares closed at SFr16.80 on July 13.

Peer Comparison Highlights Undervaluation

EFG's decline contrasts sharply with its Swiss peers, Julius Baer and Vontobel, whose shares have risen 15-20% year-to-date, according to Citi. Analysts described EFG's discount as "somewhat harsh" given its current operating trends.

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Citi highlighted that EFG is delivering net new asset growth above 6%, significantly outpacing Julius Baer's net new money growth of around 2%. While EFG historically traded at a premium to Julius Baer, the two now trade on a similar headline multiple, which Citi's analysis suggests is unjustified.

Financial Outlook and Identified Risks

Looking ahead, Citi forecasts EFG's adjusted earnings per share will reach SFr1.58 in 2028, up from a projected SFr0.80 in 2025. For the first half of 2026, the bank anticipates pre-tax profit to exceed SFr240 million, a 12% year-on-year increase excluding a one-off gain from the prior year. EFG is scheduled to release its half-year results on July 23.

Despite the bullish outlook, Citi flagged potential risks for investors to consider. These include sizable contingent legal liabilities, the sensitivity of the bank's revenues to market and currency fluctuations, and the possibility of investor rotation into Julius Baer if its strong performance continues.