UBS' (UBS) sustaining returns, driven by capital distributions, should drive further re-rating, while higher capital generation should offset the too-big-to-fail headwind, RBC Capital Markets said in a Wednesday research report.
While robust capital markets have supported the company's Q2 performance, the upcoming Swiss Upper Committee's meetings on relaxed too-big-to-fail capital requirements for UBS are vital to move the process forward, analysts wrote.
The company showcased structural progress across multiple areas in Q2, including progress on cost savings plans and higher mandate penetration, but should be able to better with more regulatory certainty, analysts wrote.
The brokerage said it reiterated its outperform rating on the stock and boosted its price target to 44 Swiss francs ($54.47) from 40 francs earlier.
Price: $53.72, Change: $+0.26, Percent Change: +0.48%