Deutsche Bank gains after UBS raises rating on earnings outlook

Deutsche Bank AG, Germany’s biggest bank, gained in Frankfurt trading after UBS AG raised its rating and earnings estimates for the company, citing improving fixed- income and equities markets. Deutsche Bank rose as much as 5.3 % to 45.37 euros ($63.59). The stock advanced 61 % this year, compared with a 14 % gain in the Bloomberg Europe Banks and Financial Services Index. The Frankfurt-based bank was raised to “buy” from “neutral” by UBS analysts. The Swiss bank also increased its 2009 earnings per share forecast 59 % to 6.28 euros and 2010 forecast 2.8 % to 5.93 euros a share. “Deutsche Bank appears to have time to build its capital organically because it’s the most profitable and best-capitalized large German bank and isn’t under pressure from financial regulator BaFin,” said analysts. Deutsche Bank, scheduled to announce second-quarter earnings on July 29, returned to profit in the first quarter on a trading rebound after its first annual loss in more than 50 years in 2008. UBS, the European bank with the biggest losses from the credit crisis, said late yesterday it raised about 3.8 billion Swiss francs ($3.5 billion) by selling shares to boost capital and said it expects a second-quarter loss. Credit Suisse analysts also today raised the target price for Deutsche Bank’s stock 20 % to 36 euros, forecasting “continued strong revenues” in investment banking and “less of a drag” from the retail businesses in the second quarter.