SAB: Dividend Yield And Post Takeover Fair Value Will Shape Share Performance

Banco de Sabadell's analyst price target has edged higher to approximately EUR 3.44, up from around EUR 3.43 previously. Analysts point to slightly improved profit margin expectations and a still-supportive valuation backdrop, despite a cluster of neutral and sector-perform ratings around the EUR 3.00 to EUR 3.50 range.

Analyst Commentary

Analyst opinions on Banco de Sabadell remain finely balanced, with price targets clustering in a narrow range around the current market level. Recent moves in target prices reflect a shift toward viewing the shares as closer to fair value, even as income and corporate actions offer potential upside drivers.

Bullish Takeaways

• Bullish analysts highlight that modestly higher target prices, despite rating downgrades, signal that earnings power and capital generation still justify incremental upside from prior expectations.
• The projected double digit dividend yield over the near term is seen as a key support for the share price, underpinning the valuation even if earnings growth slows.
• Some bullish analysts view the current price range as an attractive entry point for income focused investors, given the combination of cash returns and still reasonable earnings multiples.
• Takeover dynamics are regarded as a potential catalyst, with a successful improvement in terms potentially unlocking further value if execution is managed effectively.

Bearish Takeaways

• Bearish analysts argue that the shares now trade close to fair value, which limits scope for multiple expansion without a clear acceleration in growth or profitability.
• Neutral and hold stances emphasize execution risk around strategic transactions, including uncertainty over whether improved takeover terms would sufficiently enhance shareholder value.
• Recent downward and upward revisions to price targets within a tight band highlight concerns that earnings momentum may be peaking, which could cap upside to current forecasts.
• There is caution that, despite supportive income, any disappointment on capital deployment or regulatory outcomes could pressure the valuation back toward the lower end of the target range.

What's in the News

• BBVA’s initial April 2024 all share proposal to acquire Banco de Sabadell for €11.5 billion, offering 1 BBVA share for every 4.83 Sabadell shares, marked the start of a multiyear takeover saga. (Key Developments)
• After Sabadell’s board rejected the bid as undervaluing its standalone prospects, BBVA relaunched a hostile offer in May 2024 on the same terms. It later revised the offer in October 2024 to 1 BBVA share plus €0.29 in cash for every 5.0196 Sabadell shares. (Key Developments)
• The transaction cleared multiple regulatory hurdles, including approvals from the European Central Bank, European Commission, Spain’s National Commission for Markets and Competition, and other competition authorities between 2024 and 2025. (Key Developments)
• Sabadell’s board repeatedly advised shareholders to reject the offer, most recently in September 2025, arguing that the enhanced terms still undervalued the bank relative to its intrinsic and strategic value. (Key Developments)
• On October 16, 2025, BBVA cancelled the acquisition after only 25.5% of Sabadell’s voting rights were tendered, below the minimum acceptance threshold, causing the hostile bid to lapse. (Key Developments)

Valuation Changes

• Fair value has risen slightly to approximately €3.44 per share, from about €3.43 previously, indicating a marginal upward adjustment in intrinsic value estimates.
• The discount rate has fallen slightly to around 9.41 percent from about 9.42 percent, reflecting a modestly lower perceived risk or cost of equity in the valuation model.
• Revenue growth expectations have edged marginally lower to roughly minus 1.67 percent from around minus 1.67 percent, pointing to a very small deterioration in the top line outlook.
• The net profit margin has improved slightly to about 29.90 percent, up from roughly 29.89 percent, suggesting a minimal uplift in expected profitability.
• The future P/E has increased marginally to around 10.87 times from about 10.86 times, implying a very small expansion in the valuation multiple applied to forward earnings.