UniCredit's Path to €78.13 Driven by Long-Term Growth Potential

We firmly believe that UniCredit (UCG) has significant long-term appreciation potential, with a clear path to reaching €78.13 per share within a 10-year horizon. This thesis is supported by a combination of factors, including the current undervaluation of the stock, the ongoing strategic transformation, the focus on efficiency and digitization, the potential for growth in new markets, and the increasing capacity for cash generation.

1. Undervaluation as a Starting Point:

Currently, UniCredit (UCG) is traded at a price significantly below its intrinsic value, estimated at €78.13 per share. This undervaluation, identified through a thorough discounted cash flow analysis, suggests that the market is pricing the company conservatively, ignoring its true potential. With the convergence of the price to the intrinsic value, there is a unique opportunity for long-term investors.

2. Strategic Transformation and Operational Efficiency:

UniCredit is undergoing a profound strategic transformation, led by an experienced management team focused on the long term. The company is optimizing its costs, reducing its exposure to risky assets, improving credit quality, and increasing its operational efficiency. This transformation has generated positive and sustainable results, with increased profitability and cash generation.

3. Digitization as a Growth Catalyst:

UniCredit is investing heavily in digitization, aiming to improve customer experience, reduce costs, and increase its innovation capacity. Digitization represents a growth catalyst, enabling the company to reach new markets, attract new customers, and increase its efficiency. Continuous investment in technology and digitization represents a significant competitive advantage.

4. Growth in New Markets:

UniCredit has a strong presence in Europe, operating in several countries, including Italy, Germany, and Central and Eastern Europe. The company seeks to expand its operations in emerging markets, with significant growth potential in the long term. This geographical diversification reduces exposure to regional risks and increases the company's growth potential.

5. Cash Generation and Dividends:

We believe that UniCredit has an increasing capacity for cash generation, which will drive the growth of dividends distributed to shareholders. The increase in cash generation, resulting from the strategic transformation and improved efficiency, will allow the company to invest in new projects, expand its operations, and reward its shareholders with growing dividends.

6. Long-Term Vision:

Our investment thesis in UniCredit is based on a long-term vision, with a 10-year horizon. We believe that the market will tend to recognize the company's true value over time as its results improve and strategic transformations are consolidated. The power of compound interest, in the long term, will further boost the stock's value, and dividend distributions will provide a steady return for the investor.

7. Controlled Risk Factors:

While there are risks inherent in investing in stocks, such as macroeconomic instability, exposure to credit, and geopolitical tensions, we believe that UniCredit is well-positioned to mitigate these risks. Geographic diversification, quality of management, and investments in digitization make the company more resilient to short-term crises and challenges.

8. The Power of Patience:

Value investing requires patience and discipline. We are not seeking quick and speculative returns, but rather the consistent growth of our capital over time. We believe that, with patience and discipline, the market will recognize the intrinsic value of UniCredit, resulting in the stock's appreciation.

Conclusion:

We believe that, based on a solid fundamental analysis and a long-term vision, UniCredit (UCG) has a great potential to reach a value of €78.13 per share within a 10-year horizon. This thesis is based on the stock's undervaluation, the ongoing strategic transformation, the focus on digitization, the potential for growth in new markets, and the increasing cash generation. By investing in UniCredit, we are betting on a promising future and the company's ability to generate value for shareholders over time.

Important: This is an investment thesis. We cannot guarantee that the stock will reach €78.13 in 10 years, as the market is unpredictable. However, our analysis indicates that the company has a high potential for appreciation, and the combination of undervaluation, growth, and long-term focus increases the chances of the company reaching that level.