Banco Santander, SA (NYSE:SAN) is among the The best undervalued European stocks to buy now.. On February 4, Morgan Stanley downgraded Banco Santander, SA (NYSE:SAN) to Equalweight from Overweight, noting limited gain after a sharp rise in the stock and increased execution risk related to the bank’s growth in the United States amid its announced acquisition of Webster Financial.
Morgan Stanley expects the acquisition of Webster to generate a return on investment of 13% to 14%, which is lower than Santander’s stated expectations. The company expects the transaction to be earnings accretive by 5% to 6% by 2028.
Compared to recent mergers of comparable U.S. banks, such as Fifth Third Bancorp’s acquisition of Capital Bancorp and Huntington Bancshares’ merger with Cadence Bank, Morgan Stanley characterized these estimates as ambitious as they assume cost synergies of more than $800 million, or approximately 55% of Webster’s cost base.
Banco Santander, SA (NYSE:SAN) also announced a €5 billion share buyback, including a significant buyback related to the sale of its Polish operations, in line with Morgan Stanley projections.
Banco Santander, SA (NYSE:SAN) is a leading commercial and retail bank based in Spain that has significant market share in key markets in Europe and the Americas. It specializes in consumer and business lending, deposit taking and payment services, and aggressively manages its capital structure through dividends and share repurchases.
While we recognize SAN’s potential as an investment, we believe certain AI stocks offer greater growth potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that’s also benefiting significantly from Trump-era tariffs and the offshoring trend, check out our free report on best short-term AI stock.
READ NEXT: Top 10 Magic Formula Stocks for 2025 and The 10 Best Retirement Stocks to Buy According to Hedge Funds.
Disclosure: None. This article was originally published in Internal jumpsuit.