Kepler Cheuvreux significantly boosted its target price for Banco Santander by 41%, from €8.81 to €12.40, reflecting a strong belief in the bank's technological overhaul. This upgrade reverses an earlier downgrade and follows a remarkable 125% surge in Santander's shares last year, propelling the bank into the top 100 global market capitalizations. Analysts at Kepler acknowledged that they had underestimated the impact of Santander's technology transformation on its valuation.

The new target implies a 19.9% upside from the January 12 closing price of €10.34. The brokerage expects Santander to engage in a substantial share buyback program, purchasing €12.4 billion worth of shares between November 2025 and February 2027, which is 25% more than the minimum commitment of €10 billion. This aggressive buyback strategy is part of a broader plan to enhance shareholder returns, with forecasts suggesting annual distributions of €11-12 billion from 2027 to 2030, maintaining a 65-75% payout ratio.

Santander's recent disposal of its Polish business, completed on January 10, will contribute a capital gain of €2 billion in the first quarter of 2026. This transaction is expected to boost the bank's CET1 ratio to 14.13%, up from an estimated 13.73% at the end of 2025. Additionally, the bank's acquisition of TSB, initially planned for January 1, 2026, has been delayed until the second half of the year.

Analysts have factored in £520 million in pretax restructuring costs, with two-thirds expected in 2026 and the remaining third in 2027. The delayed integration of TSB will result in a loss of €1 billion in revenues and 7% of net profits for 2026, without corresponding operating-level offsets. Kepler Cheuvreux now projects that Santander will achieve a 20% return on tangible equity in 2029, instead of the previously anticipated 2028.

The return on tangible equity is forecasted at 18.3% for 2026 and 17.9% for 2027. For 2027, Kepler Cheuvreux forecasts total revenues of €63.5 billion, a pretax profit of €23.6 billion, and a net adjusted profit of €15 billion. The cost-income ratio is projected to decline to 40.6% in 2027, from 41.9% in 2025.

This optimistic outlook is underpinned by Santander's transformation from operating ten platforms with 500 products each to a unified global platform with 500 total products. The bank's proprietary Gravity platform has been licensed to Google for a dual cloud-mainframe deployment, showcasing Santander's strategic shift towards technology and innovation.