UBS stock (NYSE: UBS) has experienced a 7% decline year-to-date compared to a 9% rise in the S&P500, but it has seen a 4.5% increase since May 6, outperforming the broader index. This improvement followed the announcement of better-than-expected first-quarter results in 2024, surpassing both earnings and revenue estimates. Despite this, the stock is currently trading 9% below its fair value of $32, as estimated by Trefis.
Over the past three years, UBS stock has seen significant gains of 100%, rising from $15 in early 2021 to around $30 now. Although the stock has consistently increased in value each year, it has struggled to outperform the market. Returns for UBS were 26% in 2021, 4% in 2022, and 66% in 2023, compared to the S&P 500’s returns of 27%, -19%, and 24% over the same period. Beating the S&P 500 has been a challenge for individual stocks in recent years, including financial heavyweights like JPM, V, and MA.
UBS reported total revenues of $12.74 billion in the first quarter of 2024, a 46% increase year-over-year. This growth was driven by higher revenues in all segments, including global wealth management, personal and corporate banking, asset management, and investment banking. The increase in revenues was partially due to the consolidation of Credit Suisse’s revenues of $3.8 billion and organic growth. Furthermore, total noninterest expenses as a percentage of revenues decreased, resulting in an adjusted net income of $1.76 billion, up 71% year-over-year.
In FY2023, UBS’s net revenues rose 18% year-over-year to $40.8 billion, driven by growth in the wealth management and personal & corporate banking units. The company also benefited from a negative goodwill of $27.75 billion related to the acquisition of Credit Suisse, which significantly boosted the bottom line. However, higher provisions for credit losses and operating expenses offset some of this impact, leading to an adjusted net income increase of over 250% to $27.8 billion.
Looking ahead, UBS is expected to report similar results in Q2, with estimated revenues of $46 billion for FY2024. The adjusted net income is projected to remain around $3.5 billion, resulting in an annual GAAP EPS of $1.07. With a P/E multiple just below 30x, this is expected to lead to a valuation of $32 for the stock. Despite the current uncertain macroeconomic environment, investors will be watching closely to see if UBS can outperform the S&P 500 in the coming months.
