Deutsche Bank Downgraded by Goldman Sachs After Massive Year to Date Gains

Goldman Sachs believes the recent surge in Deutsche Bank shares means it’s time for investors to take a more cautious stance.

‍

Analyst Chris Hallam at Goldman Sachs downgraded the German banking giant from Buy to Neutral, noting that its impressive rally has pushed the stock’s valuation into what he now considers “fair value.”

‍

So far in 2025, U.S.-listed shares of Deutsche Bank have soared 116%, setting the stage for what could become the bank’s best year on record.

‍

“Deutsche Bank’s price-to-earnings ratio has climbed from 6.1x at the close of 2024 to 10.1x today,” Hallam wrote. “That’s slightly above the market cap-weighted average of 9.5x across our coverage universe.

‍

Meanwhile, Deutsche Bank’s expected earnings growth for 2026 and 2027 is roughly in line with peers, though profitability will likely be a bit lower.”

‍

Despite the downgrade, Hallam maintained a generally optimistic long-term view on Deutsche Bank. He highlighted the firm as a key player poised to benefit from Germany’s new fiscal stimulus package, thanks to its extensive corporate banking network.

‍

“We anticipate Deutsche Bank will continue strengthening its profitability and exceeding consensus earnings forecasts through 2025 and 2026,” Hallam said.

‍

“Additionally, the bank is expected to steadily boost capital returns to shareholders through dividends and share buybacks.”

‍

The analyst also pointed to cost discipline and revenue growth as critical factors that could support margin expansion. According to Hallam, Deutsche’s investment banking division will remain its primary earnings driver, while its corporate and private banking units will also contribute to growth.

‍

Looking ahead, Hallam projects low to mid-single-digit revenue growth for Deutsche Bank’s corporate and private banking segments over the next two years. This expansion should help increase the share of recurring revenue streams, further strengthening the bank’s financial foundation.

‍