My last report on Julius Baer had a rosy outlook for the stock. This forecast has not aged well as the stock has crashed by over 29% from its highest level in 2023. It is now hovering near its lowest level since October 2022, making it one of the worst-performing company in Switzerland.
Why Julius Baer shares have plungedJulius Baer is one of the most prestigious banks in Switzerland with over CHF 427 billion in assets under management (AUM) and over CHF 96 billion in assets. It is a company that focuses mostly on wealth and asset management.
My bullish case for Julius Baer in 2023 was that it would gain more assets as Credit Suisse imploded. This prediction has worked out as I predicted as evidenced by its annual results. Its AUM jumped by just 1% to CHF 427 billion while its net new money rose by 43% to CHF 12.5 billion.
Inflows have been lower than most analysts were expecting because Credit Suisse was acquired by UBS, one of the safest banks in the world. This is one reason why the Julius Baer share price has underperformed in the past few months.
The other reason is that the company has been caught up in the ongoing real estate industry collapse. For one, the company was one of the lenders of Signa Holdings, an Austrian company that collapsed recently. As a result, it was forced to write off the loans, which saw its annual loss jump to CHF 606 million.
It also made management changes announced a plan to lay off 250 people and exited the private debt market, which accounted for about 2% of assets. It also sold its Kairos business.
The challenge that Julius Baer faces is that analysts believe that it has more exposure in the real estate sector, an industry that is going through a period of turmoil.
Still, a case for Julius Baer as an investment can be made. It is still a strong franchise that is the best alternative to UBS, the biggest wealth manager in the world.
Julius Baer share price forecast
The daily chart shows that the Julius Baer stock price peaked at CHF 64.76 in April as Credit Suisse collapsed. Recently, the shares have continued plunging and is now trading at CHF 46. It remains below the key support level at CHF 50.32, the lowest swing in March. The stock has remained below the 50-day and 100-day Exponential Moving Averages.
It is also above the 78.6% Fibonacci Retracement level and slightly above the ascending trendline that connects the lowest swings since November 28th. Therefore, technically, the stock will likely continue falling as sellers target the key support at CHF 43.0. A break below that level will see it drop to the key support at CHF 39.28.
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