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#SaxoStrats - Buying 'undervalued' Deutsche Bank

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Despite a collapse in the share price, down around 60% since August 2015, Head of Equity Strategy Peter Garnry is buying Deutsche Bank stock.

Alongside the latest message of re-assurance from the bank's senior management, that bonds will be bought back in an effort to prove the bank has the capability to pay its debt, Peter sees a strong capital base and underlying operating profit unchanged.

"Risk-weighted assets are at 400 bn EUR. Only 1% return after-tax on those assets is enough to price Deutsche Bank at P/E 5x which is significantly below peers. We believe a re-pricing of the stock will happen now as investors begin to look more realistic at the capital and underlying profit." adds Peter. 

Buy at current levels.

Trailing stop: EUR 11.11 with increments of 0.21 cents 

Target: EUR 20.00