Is the Credit Suisse stock price a bargain ahead of earnings?

By:
on Oct 25, 2022
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  • Credit Suisse stock price has been in a strong bearish trend for more than a decade.
  • The company will publish its quarterly results on Thursday this week.
  • The most important catalyst for the stock will be the unveiling of the new strategy.

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Credit Suisse (NYSE: CS) (SWX: CSGN) stock price has crawled back recently as investors focus on the upcoming earnings and strategy change. The shares rose to a high of $4.7 in New York, which was slightly above this month’s low of $3.71. They are about 67% below the highest level this year.

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Credit Suisse strategy shift

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Credit Suisse, one of the biggest finance and banking companies globally, has come under intense pressure in the past few months. Indeed, the bank has struggled to recover from its Global Financial Crisis (GFC). While its competitors have recovered, its stock has crashed by over 88% from its highest level in 2008.

Credit Suisse has been under pressure for several reasons. Unlike other banks, it has moved from one crisis to another. Some of the top crises the bank has faced are Tuna bonds, Greensill Capital collapse, and Archegos Capital Management collapse. 

In total, the firm’s poor risk management strategy has seen it lose more than $5 billion in the past few years alone. This week, the company agreed to pay over $234 million as part of a fraud investigation in France.

Therefore, the company’s earnings on Thursday will have a mild impact on its shares. Instead, the key catalyst for Credit Suisse share price will be the company’s strategy. Precisely, the shares will react to the possibility of a new capital raise by Credit Suisse.

Some of the potential strategies have been revealed. For example, Credit Suisse is nearing a sale of its New York-based securitised business. Some of the potential buyers ar Apollo, Pimco, and Martello Re.

Last week, Credit Suisse sold a 8.6% stake in Allfunds for about $327 million. It will likely unveil more asset sales as it seeks to fill a capital hole in its books.

Credit Suisse stock price forecast

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Credit Suisse stock price

The daily chart shows that the CS stock price has been crawling back recently after it crashed to a low of $3.70 early this month. This recovery has seen the shares approach the key resistance level at $5. 

The stock remains below all moving averages while the Relative Strength Index (RSI) has moved above the neutral point at 50. It seems like it is forming a break-and-retest pattern by moving back to $5. 

Therefore, while it is too early to tell, there is a likelihood that Credit Suisse share price will sink after the strategy statement.

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