Business profits surge for Bechtle amid recovery, unrelenting rise in Commerzbank shares persists
In the MDax, Bechtle saw a significant boost, with a 9.1% increase to 40.22 euros by late afternoon, while Commerzbank gained 3.7% to 34.55 euros in the Dax. However, Munich Re's stock took a dip, falling 5.1% to 564.40 euros by afternoon, despite the company increasing its first-half profit to 3.2 billion euros, thanks to the absence of major losses.
The strong profit performance was not enough to appease investors, who expressed concerns about the company's growth prospects and volume contraction. Munich Re revised down its reinsurance revenue expectations for 2025 (from about €42bn to €40bn) and insurance revenue accordingly (from €64bn to €62bn). The company also reported a decline in reinsurance prices (about 1.2% to 2.5%) and reduced its underwriting volume by around 3.2%, selectively avoiding business that did not meet profit targets.
The cautious growth outlook, price declines in renewals, and strategic reduction in business volume have led to downward pressure on the stock price. Investors appear to be focusing on growth metrics beyond profit levels, which has further contributed to the stock fall.
Meanwhile, the Euro Stoxx 50 was up 0.2% in the same trading session. Markets are also influenced by hopes for peace or a ceasefire in the war between Russia and Ukraine, as well as the prospect of a Fed interest rate cut as early as September. Robert Greil, chief strategist at Merck Finck, predicts a likelihood of a Fed interest rate cut in September due to expected increased US inflation in July.
The DAX closed 0.1% lower at 24,163 points in the latest trading session, while the bond market saw the benchmark Bund future fall 0.4% to 129.74%. Despite the overall market volatility, Bechtle saw a recovery in the second quarter and has confirmed its full-year forecast, signifying a positive development in the market. The DAX has shown a positive development in the past week, gaining more than 3% and currently targeting the all-time high of 24,639 points.
Analysts, such as Jefferies, rate Bechtle as a 'buy' with a price target of 48 euros, while DZ Bank maintains its 'buy' recommendation for Munich Re with a price target of 640 euros. Thorsten Wenzel, an analyst at DZ Bank, states that the results of the June/July renewal confirm that the peak in the reinsurance cycle has been exceeded.
In conclusion, while some companies, like Bechtle, are thriving in the current market conditions, others, such as Munich Re, are facing challenges. The market continues to be influenced by a variety of factors, including geopolitical tensions, economic indicators, and company-specific performance.
Investors' concerns about Munich Re's growth prospects and volume contraction have resulted in a decline in its stock price, despite the company's strong profit performance. On the other hand, analysts like Jefferies rate Bechtle as a 'buy' and predict a recovery in the company's financial state, signifying a positive development in the investing sector of business.
