Barclays has reaffirmed its 'overweight' recommendation on UniCredit, with a price target raised from 35.9 to 41.5 euros, presenting the stock as its favorite among Italian banks, alongside Banca Monte dei Paschi di Siena (MPS).

Ahead of the sector's first-quarter publications, the broker says it expects "solid net interest income, maintained or improved EPS forecasts for 2024 and optimistic messages on capital returns".

These positive fundamentals should continue to drive multiple upgrades and are likely to support stocks, in light of potential mergers and acquisitions', adds Barclays in its note on Italian banks.

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