Santander (SAN) and Webster Deal Faces Execution Risk, Says Morgan Stanley

SelfRugger · 2026-03-30T02:33:32+00:00

Morgan Stanley has downgraded Banco Santander to Equalweight, citing execution risks with its Webster Financial acquisition and ambitious growth forecasts. While the deal may yield modest earnings growth, it faces challenges compared to recent U.S. bank mergers.

SelfRugger

2026-03-30 02:33:32

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Santander (SAN) and Webster Deal Faces Execution Risk, Says Morgan Stanley

Sheryar Siddiq

Sun, February 15, 2026 at 11:11 PM GMT+9 2 min read

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Banco Santander, S.A. (NYSE:SAN) ranks among the best undervalued European stocks to buy now. On February 4, Morgan Stanley reduced Banco Santander, S.A. (NYSE:SAN) to Equalweight from Overweight, noting limited upside after a robust stock surge and increased execution risk related to the bank’s growth in the United States amid its announced acquisition of Webster Financial.

Morgan Stanley forecasts that the Webster acquisition will generate a return on investment of 13% to 14%, which is lower than Santander’s stated expectations. The firm expects that the transaction will increase earnings by 5% to 6% by 2028.

In comparison to recent comparable U.S. bank mergers like Fifth Third Bancorp’s takeover of Capital Bancorp and Huntington Bancshares’ merger with of Cadence Bank, Morgan Stanley characterized these estimates as ambitious since they assume cost synergies of over $800 million, or roughly 55% of Webster’s cost base.

Banco Santander, S.A. (NYSE:SAN) also announced a €5 billion share repurchase, including a significant buyback related to the sale of its Polish operations, in line with Morgan Stanley’s projections.

Banco Santander, S.A. (NYSE:SAN) is a major retail and commercial bank headquartered in Spain that has a significant market share in key European and Americas markets. It specializes in consumer and business lending, deposit-taking, and payment services, and aggressively manages its capital structure through dividends and share buybacks.

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**READ NEXT: 10 Best Magic Formula Stocks for 2025 and **10 Best Retirement Stocks to Buy According to Hedge Funds.

Disclosure: None. This article is originally published at Insider Monkey.

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