Banco Sabadell shares recorded a 68 percent rise in the year, making the entity the best bank on the IBEX 35 and the second best value of the entire selective, after Laboratorios Rovi.
In this way, the group that leads César González-Bueno It will sign the best year since it went public in 2001 and will more than offset the 65 percent drops in 2020 caused by the coronavirus pandemic.
There are several milestones that make the difference in this record year, starting with the entry into profit of TSB, the British subsidiary, which finally gives joy after years of hardships and red numbers.
In addition, Banco Sabadell recovered the cash dividend and made progress in the execution of its strategic plan, which was also valued by investors.
With these wickers, the bank was able to overcome on the stock market the disappointment caused by the failure of a merger with BBVA, although analysts have not yet definitively ruled out the operation.
Upward potential of 13% for Banco Sabadell
Despite these advances, the consensus of analysts at Finanzas.com still believes that there may be more increases in Sabadell Bank.
Thus, experts calculate a target price for the entity of 0.68 euros per share, which offers a rebound potential of around 13 percent.
What’s more, the analysis houses that recently revised their valuation are even more optimistic. For example in JB Capital Markets they calculate a price target of 0.9 euros, which implies a potential return of 50 percent. And in Alphavalue They see hikes of 23 percent.
Furthermore, the entity’s bullish rally took place within a much more positive sector context for the financial sector.
In the end, “the economic recovery expectations that were seen until omicron were very positive for the companies most linked to the cycle, such as banks,” he said. Manuel Pinto, XTB analyst.
For this reason, banks reduced their provisions and received the green light to return to the dividend, another factor that drove the rebounds.
Banco Sabadell’s strategic plan as a catalyst for progress
Added to this is “the exceptional year of the banking sector in the U.S, where expectations of increases in interest rates have been discounted ”, stressed this expert.
However, one of the most prominent catalysts by analysts to extend the increases is the future execution of the strategic plan deployed by the entity.
It is “a well-defined business management strategy, with greater specialization in the business segment and the development of the corporate banking business,” he said. Nuria Alvarez, Income 4 Bank analyst.
To this we must add capital levels above 12 percent, which gives the bank some scope to increase provisions if necessary.
To these factors Pinto adds the mortgage production of Sabadel Bankl both in Spain As the United Kingdom, which “has grown a lot”, together with the contribution to the results of commissions for services and investment funds.
The possible merger of Banco Sabadell with BBVA
Finally, the market has not yet determined the merger with BBVA. The European Credit Rating Agency Axesor believes that the two banks could resume talks in 2022.
According to this source, there are incentives for the talks to resume. It is true that Banco Sabadell’s strategic plan is giving good results, but the stress tests revealed “certain weaknesses,” Axesor said.
Also, the latest adventure of BBVA in Turkey With the takeover bid on Garanti, it has generated many doubts among investors, so that the Basque entity could allocate its excess capital to the merger to avoid the deterioration of the assets that Axesor foresees due to the rise in non-performing loans.
Due to technical perspectives, the first major obstacle that the Banco Sabadell price will encounter is at 0.62 euros, where there is “very strong resistance,” said Pinto.
“If this area were to break upwards, it would try to reach the all-time highs we have seen this year,” around 0.73 euros, added the XTB expert.