Goldman Sachs reshuffles Italian bank ratings, upgrades Intesa Sanpaolo to “buy”

Investing.com -- Goldman Sachs upgraded Intesa Sanpaolo to “buy” from “neutral” on Friday, setting a €6.9 price target with 36% upside, as it overhauled ratings across Italy’s banking sector, cutting Banco BPM and initiating coverage on two lenders.

Intesa has underperformed the broader European banks index SX7P by roughly 7 percentage points since the start of the year, with shares trading at 8.8x 12-month forward LSEG Consensus price-to-earnings, 5% below Goldman Sachs’ European banks coverage average.

Goldman Sachs forecast sector-leading returns of more than 20% for Intesa over 2026-28, against a coverage average of roughly 16%, and a capital distribution yield of 11%.

On valuation, Intesa trades at 8.2x 2027 price-to-earnings on Goldman Sachs estimates versus a coverage average of roughly 8.5x. 

The brokerage said it sits 3% to 4% above Visible Alpha Consensus profit estimates for 2026-28, citing higher net interest income, fee income, and lower loan loss provision forecasts.

Goldman Sachs cut Banco BPM to “neutral” from “buy,” saying high returns and capital generation were "fully reflected in Visible Alpha Consensus Data EPS and DPS estimates for 2026-27." 

Banco BPM is the only Italian bank in Goldman Sachs’ coverage with negative earnings-per-share growth in 2026, with return on tangible equity forecast at roughly 19% by 2027 against a coverage average of below 17%. 

Capital generation is seen above 300 basis points by 2027, "somewhat below that of its Italian peers," Goldman Sachs said.

Goldman Sachs initiated Banca Monte dei Paschi di Siena at “buy” with a 12-month price target implying roughly 35% upside, pointing to revenue diversification and synergy benefits from its acquisition of Mediobanca, shifting the mix toward Wealth Management, Consumer Finance, and Insurance. 

Monte dei Paschi trades at 9.4x 12-month forward consensus price-to-earnings, slightly above the coverage average of 9.2x, and at 0.99x price-to-tangible book value, below the sector at 1.5x. Goldman Sachs said "strong fundamentals and a sector-leading capital distribution yield are not fully reflected in current valuation levels."

BPER Banca was initiated at “neutral” with a €13.70 price target. Despite outperforming the SX7P by more than 30 percentage points since January 2025, Goldman Sachs said positives were "already largely reflected in the current share price." 

With the acquisition of Banca Popolare di Sondrio, BPER became Italy’s third-largest bank, with more than 95% of deposits in low-cost demand deposits.