Morgan Stanley has downgraded Santander to “equal-weight” from “overweight,” citing integration risks associated with the bank's U.S. expansion. The analysts raised the price target to €11.50 from €11.00 but removed the stock from their Top Pick list. The bank's shares fell approximately 3% after the announcement, reflecting investor concern.

The downgrade followed Santander's agreement to acquire Webster for $12 billion. Morgan Stanley views the deal's economics as reasonable, but worries about Santander's ability to execute the integration successfully, especially given its lack of a strong track record in the U.S. market. The brokerage anticipates potential revenue attrition.

Analysts estimate the return on investment from the Webster deal at 13% to 14%, below Santander's targets. The brokerage also noted the scale of planned cost reductions could raise the risk of revenue attrition. Investors are now focused on the integration of TSB in the U.K. and Webster in the U.S.

Ultimately, Morgan Stanley believes the market has limited upside for Santander shares. The brokerage anticipates that any future success will depend on evidence of successful integration rather than stated targets alone. Santander recently announced a share buyback plan of €5bn. The stock closed on Feb 3, 2026 at €11.09.