Shares of UBS (NYSE: UBS) were up in morning trading on Tuesday even as the credit rating agency Moody’s downgraded the long-term outlook on the Swiss bank’s long-term deposit ratings and senior unsecured ratings to negative from stable following its takeover of Credit Suisse (CS).
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Following this acquisition, Moody’s remains concerned that CS’s weak credit profile and the cost of integration would result in the possibility of UBS missing its financial targets.
However, the credit rating agency commented that the deal had “the potential, in due course, to significantly enhance UBS’s franchise in wealth management, Swiss banking, asset management and to a lesser degree in investment banking, whilst targeting a reduction of operating costs by more than $8 billion.”
This is the second downgrade in credit rating for UBS following S&P Global also revising its outlook to negative for similar reasons.
Analysts remain cautiously optimistic about UBS stock with a Moderate Buy consensus rating based on nine Buys, two Holds, and two Sells.