We use a Warranted Equity Valuation (WEV) approach adjusted for excess capital to value Alpha Bank. Our model assumes a terminal excess capital adjusted (assumes a required 14% CET1) RoTE of 13%, a CoE of 12%, and 2% growth rate. This drives our TP of €3.90.

A number of risks could prevent Alpha's share price from achieving our target price:

(1) Better- or worse-than-expected revenue development trends, driven by margins, interest rates, volume trends, ability to impose fees to clients, and changes to the competitive environment.

(2) Inability to achieve planned cost savings from internal efficiency measures and reduction in NPE related management costs.

(3) Higher/Lower provisions due depending on performance of the economy.

(4) Unexpected regulatory initiatives that impact earnings.

(5) Better or worse execution of recently announced M&A.
 
If the impact on the company from any of these factors differs from our base case expectations, the stock could have difficulty achieving our target price or could increase more than we expect.