Analyst Note| Niklas Kammer, CFA |
Narrow-moat Credit Suisse reported a net loss of CHF 273 million for the first quarter. The group remains in disarray, losing revenue in its wealth-management business, booking material provisions for litigation issues, and reshuffling its executive suite to sever ties with its recent series of missteps. Many of these struggles were known or hinted at during the fourth-quarter earnings release in February. As such, we maintain our fair value estimate of CHF 10 per share, which makes Credit Suisse undervalued, in our view. We do stress our very high uncertainty rating, however. Investors should consider that reshaping loose risk controls, which brought Credit Suisse into the dark spot it finds itself in today, typically takes considerable time and effort to resolve. As a result, price appreciation to within range of our fair value estimate may not happen overnight.