BofA Cuts Credit Suisse Price Target For Second Time In 3 Days

Credit Suisse Group AG (NYSE: CS) shares were trading down again Wednesday amid lingering uncertainty related to the bank’s exposure to Archegos Capital Management.

That dynamic prompted one analyst to cut his price target for Credit Suisse for the second time in three days.

The Credit Suisse Analyst: BofA Securities analyst Alastair Ryan reiterated a Neutral rating on Credit Suisse and cut the price target for the company’s Swiss-listed shares from $13.29 to $12.12.

Related Link: Credit Suisse Stock Buybacks 'Directly Affected' By Hedge Fund Liquidation: Analyst

The Credit Suisse Takeaways: Ryan’s latest price target cut comes after he downgraded Credit Suisse from a Buy rating on Monday and reduced his price target from $14.91 to $13.31.

In the note, Ryan said BofA  has increased its estimate for losses tied to the Archegos unwinding from $531 million to $2.12 billion.

The silence from Credit Suisse has contributed to the uncertainty, and some media outlets have speculated losses could even exceed $4 billion, the analyst said. 

“While we note high volumes in the stocks associated with Archegos, which could have enabled all relevant parties to exit, the absence of disclosure leaves open the possibility of Credit Suisse having funded different assets, or having for some reason retained its exposures,” he said. 

Investment banks including Goldman Sachs Group Inc (NYSE: GS), Morgan Stanley (NYSE: MS) and Deutsche Bank AG (NYSE: DB) reportedly forced Archegos to liquidate its positions on Friday after the fund defaulted on margin calls last week.

The liquidation triggered sharp drops in some of its top holdings, including ViacomCBS Inc. (NASDAQ: VIAC) and Discovery Inc (NASDAQ: DISCK).

Credit Suisse subsequently issued a statement to investors that its first-quarter earnings numbers could take a sizable hit due to the liquidations, but the company has yet to quantify its losses.

On Wednesday, BofA cut its 2021 EPS estimate for Credit Suisse from $1.41 to 95 cents. The new estimate represents a 14.6% drop from a year ago.

CS Price Action: Credit Suisse shares were trading down 4.46% at $10.50 at last check Wednesday. 

Benzinga’s Take: The Archegos-driven sell-off may ultimately prove to be an attractive long-term entry point for Credit Suisse investors, but there’s no way to know just how large the losses will be and just how much more downside the stock could have in the near-term.

Until Credit Suisse provides investors with additional clarity, the stock will likely continue to struggle.