Unicredit share price analysis: where technicals meet fundamentals

Unicredit (MIL: UCG) share price has been one of the best-performing bank companies in the world this year. The stock surged to a high of €24, the highest level since December 2015. It has jumped by more than 225% from the lowest level in 2022. Most importantly, it has roared back by over 80% this year while the Invesco KBW ETF has dropped by almost 30%.

Unicredit, the biggest bank in Italy, is doing well, as the company continues benefiting from the rising interest rates. The company’s financial results showed that the net revenue in the third quarter rose by 23% to €5.8 billion. Net interest income jumped by 455, helped by higher rates.

Its fee revenue dropped by 5% to €1.75 billion while its trading revenue rose by 27% to €499 million. As a result, the company plans to distribute €6.5 billion to its shareholders through dividends and share buybacks. It has also decided to set aside €1.3 billion in reserves for the country’s windfall tax. 

Unicredit is also one of the safest banks in the region. It has a CET1 ratio of 17.19%, which is much higher than other banks. For example, JPMorgan, which is known for its fortress balance sheet, has a CET1 ratio of 13.2%. Similarly, other banks like Wells Fargo, State Street, Bank of America, and Citigroup have a CET1 ratio of less than 12.

Unicredit has a strong dividend record even as the Italian government imposes windfall taxes. It has a dividend yield of 4.65%, which is higher than other companies. Its payouts are relatively higher than its peers. 

Unicredit is also relatively cheaper than other European banks like BNP Paribas, ING, Santander, and Credit Agricole. It has a forward PE multiple of 5x while the other banks have risen to over 6.

Unicredit chart by TradingView

The daily chart shows that the Unicredit stock price has been in a strong bullish trend in the past few months. It rose to a high of €23.825 on September 22nd. The stock has formed a strong triple-top pattern whose neckline is at €20.40.

Unicredit stock price rose above the 50-day and 100-day exponential moving averages (EMA). The MACD has also formed a bearish divergence pattern. Therefore, while Unicredit is a good company, technical analysis points to more downside in the coming days. If this happens, it will likely retest the key support at €20.40.

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