GLE Re Rating Will Expose Overoptimistic Profitability Assumptions Through 2027

The analyst fair value estimate for Société Générale Société anonyme has been raised from EUR 38.92 to EUR 53.60 as analysts factor in stronger expected revenue growth and higher profit margins, reflected in a series of recent price target increases across the Street.

Analyst Commentary

Recent Street research on Société Générale Société anonyme has generally tilted positive, with multiple price target increases and at least one rating upgrade reflecting rising confidence in the bank's earnings power through 2027. The cluster of targets in the low to high EUR 60s suggests that many analysts now see meaningful upside from prior expectations, driven by an improved revenue outlook and better margin resilience.

However, even within this more constructive backdrop, there are signs of emerging caution. Some bearish analysts emphasize that the shares have already re-rated significantly, arguing that the current valuation embeds ambitious assumptions on cost discipline, capital return and sustained fee income growth. They also highlight that sector wide macro and regulatory risks could temper the pace at which the bank can deliver on its medium term profitability ambitions.

Notably, JPMorgan trimmed its target to EUR 66 from EUR 67 while maintaining an Overweight stance, describing the move as a recalibration rather than a shift in fundamental thesis. This modest reduction underscores lingering execution risk around strategy delivery and capital optimization, even among more supportive voices.

Bearish Takeaways

• Bearish analysts caution that the rapid succession of target hikes into the EUR 60 to EUR 70 range may leave limited room for further valuation expansion if revenue momentum moderates or cost savings fall short of plan.
• The small but notable cut in the JPMorgan target is cited as evidence that, even among major global banks, there is recognition of execution risk around delivering on margin and return on equity goals through the cycle.
• Some bearish analysts flag that the upgraded ratings and higher targets assume a supportive macro environment and benign credit trends, leaving the shares vulnerable if loan losses or regulatory capital requirements increase.
• There is concern that expectations for profitability improvement through 2027 now run ahead of historical delivery, with downside risk if management struggles to translate strategic initiatives into consistent, high quality earnings growth.

What's in the News

• Board meeting scheduled for October 29, 2025, to review Société Générale Société anonyme's third quarter and first nine months 2025 results, signaling upcoming visibility on earnings trajectory (Key Developments)
• Completion of a €1,000 million share buyback program, with 18,285,541 shares repurchased between July 31, 2025, and October 14, 2025, equivalent to 2.35% of share capital, reinforcing capital return commitments (Key Developments)

Valuation Changes

• Fair Value Estimate has risen significantly from €38.92 to €53.60, reflecting upgraded expectations for earnings and capital generation.
• Discount Rate has increased slightly from 7.30% to 7.55%, implying a modestly higher required return to compensate for perceived risk.
• Revenue Growth has been revised higher from about 2.3% to 4.6%, indicating a more optimistic view of top line expansion.
• Net Profit Margin has risen from roughly 14.7% to 16.9%, signaling improved expectations for operating efficiency and profitability.
• Future P/E has edged up from 9.1x to 9.3x, suggesting a slightly richer multiple being applied to forward earnings.