This article first appeared on GuruFocus.
UBS Group (NYSE:UBS), the global wealth-management and investment-banking powerhouse, flipped its Federal Reserve forecast Monday as the stock stayed at $55.38. UBS now expects quarter-point rate increases in September and December, abandoning its previous forecast for no policy change in 2026.
The pivot came after the U.S. economy added 162,000 jobs in August while unemployment held at 4.1%. The market-implied probability of a September increase jumped to approximately 58% from 52%. UBS’s second-quarter results already showed serious firepower: $2.8 billion in net profit, $36 billion of wealth-management net new assets and a 14.4% CET1 capital ratio.
Two hikes would lift the policy rate by 50 basis points, potentially giving UBS another earnings leverbut investors are already paying up. At $55.38, the stock trades 42.47% above its $38.87 GF Value estimate. That premium says the market sees the upside from higher rates and UBS’s enormous $7.3 trillion asset base; it also leaves far less room for deposit pressure, weaker bond valuations or nervous clients to spoil the story.