Tuesday, November 30

Indra, Talgo and Unicaja conquer UBS

Analysts UBS Indra, Talgo and Unicaja were included in their list of the 20 best European listed companies within the small and mid-cap segment.

Among the more than 400 companies covered by the Swiss bank, the three Spanish companies meet demanding conditions. For example, all accounts with a ‘buy’ recommendation and also have an “attractive” risk / return profile.

In addition, stocks must have strong fundamentals, upside potential, and attractive levels of liquidity.

European small and mid-cap companies have performed reasonably well, analysts explain.

It is true that last year they suffered a strong impact from the pandemic, but this year they rebound 22 percent, in line with the large listed companies.

Reasonable appraisals for UBS

By these analysts’ calculations, small and mid-cap companies trade at a slight discount to large caps. But they also have a 10 percent premium over their five-year averages.

In view of the multiples, experts believe that these companies have “a reasonable valuation” compared to the large listed companies.

They also highlight that the levels of leverage are not very different with respect to the group with the largest capitalization.

It is true that small companies are more exposed to sectors that may suffer more, but their debt / ebitda ratio is 1.14 times, compared to 1.13 times for large listed companies.

Indra lives a strong moment in results

For Indra, the Swiss bank’s economists calculate a target price of 12.2 euros per share, which offers a potential upside of 18 percent.

“Its profit moment is strong this year, a positive surprise compared to previous years,” explained the analysts.

Among the key catalysts is a “strong portfolio” in the defense division, they add at the Swiss bank. In this sense, Finanzas.com has already explained the opportunity that is opening up at Indra thanks to the higher expected spending on defense due to the crisis in Afghanistan.

Looking ahead to 2022, experts hope that the good moment and the strength of the defense division will continue. In addition, they highlight that the technology division can also bring positive surprises, due to the impact of European funds and the macroeconomic recovery.

Talgo, an attractive option to bet on recovery

In the case of Talgo, analysts calculate a price target of 5.1 euros, a valuation that shows a potential return of 17 percent.

“We believe that Talgo is very cheap and is an attractive option to bet on recovery, as trips resume,” explain the UBS experts.

True, its latest results showed mixed trends, with further weakness at the top of the tally, but the group “should gain traction as the recovery in the maintenance division leads to healthier margins.”

In addition, the group is working on a strategic plan for the 2022-2026 period and is working on a new compensation plan for its shareholders.

Potential returns of 53 percent in Unicaja Banco

The list of Spanish listed companies is completed with Unicaja Bank, where the economists of UBS calculate potential returns of 53 percent.

The Andalusian financial institution stands out for its “solid capital position” in comparative terms, which the bank will probably “strengthen even more” next year. Its CET1 capital ratio of over 13 percent is the highest among domestic banks.

The main weak point of the business is the net interest income, but the worst should have been left behind, as the Euribor of a truce. In this sense, the bank is well positioned to benefit from a rebound in loan volumes.

Finally, in an environment and normalized benefits like the one they expect in UBS, the entity will offer a 7 percent dividend yield next year, the experts add.

As finance.com explained about the Unicaja dividend, the bank has sufficiently comfortable capital levels to be able to maintain a 50 percent pay out.


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