CFRA upgrades ING Groep amid a change in methodology

CFRA analyst Firdaus Ibrahim has upgraded ING Groep's recommendation from Hold to Buy, raising the price target from $25 to $30 due to a shift in valuation methodology from Price-to-Book to Price-to-Earnings ratios.

The new price target corresponds to a 2026 P/E ratio of 11.3 times earnings, reflecting increased profitability and capital return potential, justified by ING's operational momentum.

ING has effectively navigated a challenging interest rate environment while maintaining cost efficiency and diversifying fee income, along with a €2 billion share buyback initiative aimed at benefiting shareholders.

The consensus among analysts is positive, with most rating ING as a Buy, although some analysts and the Quant Rating system continue to maintain a Hold stance.

Recommendation Rating: Strong Buy

CFRA analyst Firdaus Ibrahim has raised his recommendation regarding the American Depositary Shares of ING Groep, a Netherlands-based financial institution listed on the NYSE under the symbol ING.

The rating has been upgraded from Hold to Buy, with a revised price target of $30, an increase from the previous target of $25. During Thursday morning trading, ING shares were down by 0.66%, priced at $25.58.

In his research note, Ibrahim explained the rationale behind this decision: "We have shifted our valuation approach from a Price-to-Book (P/B) ratio to a Price-to-Earnings (P/E) ratio, which is more in line with the current market landscape and ING's operational progression."

The new target price reflects a 2026 P/E ratio of 11.3 times earnings. This represents a premium over ING's five-year historical average forward P/E of 8.9 times, a premium that is warranted due to the bank's enhanced profitability and potential for capital returns. According to Ibrahim, "The operational momentum of ING, coupled with its appealing valuation, supports our decision to upgrade the stock to Buy."

The bank has adeptly maneuvered through a challenging interest rate environment while exhibiting strong performance in capital returns, maintaining cost efficiency, and diversifying its fee income. ING’s €2 billion share buyback initiative is expected to deliver immediate value to shareholders. Currently, the stock is trading at 9.5 times the estimated 2026 P/E, despite having appreciated by 20% since our last upgrade in May, further emphasizing its attractive valuation."

CFRA's upgrade coincides with a general consensus among analysts, who also rate the stock as a Buy on average. However, the Quant Rating system and some sell-side analysts maintain a Hold sentiment on ING.