Wednesday, December 8

The idyll of BBVA after Garanti and Investor Day


A large group of investment entities that cover BBVA have not hesitated to position themselves after the takeover Guarantee and the explanations of the bank president, Carlos Torres Vila, on the new objectives of the group, shelled during the Investor Day.

The result of the consensus changes is positive for BBVA. The valuation improvements outweigh the cuts. In addition, the price drops are in most cases symbolic.

Oddo raises the price by almost 12%

Oddo BHF It was the last broker to join this list with an increase in the board from “neutral” to “overreturn” and an improvement in the target price for the next 12 months of 11.7 percent, to 6.70 euros per share.

The share value improved by the same percentage Jefferies, up to 7.60 euros, ranking as the most positive firm with BBVA of the entire market consensus compiled by Bloomberg.

Caixabank BPI It was the first entity to make a move after the offer of more than 2,000 million euros was known for the 50.15 percent that Torres Vila’s do not control of its Turkish subsidiary Garanti.

Testimonial price cuts

The bank’s analysts raised the price by 5 percent, to 7.15 euros for one year, also among the most positive of the consensus.

For its part, Alphavalue improved both the recommendation, from “reduce” to “add”, and the target price, from 6.44 euros to 6.45 euros, while Alantra y JB Capital They upgraded it to “buy” and “neutral” respectively.

On the other hand, the vast majority of the cuts were practically testimonial since Societe Generale it made it worse by 10 cents, to 6.70 euros; RBC Capital in another 10 cents, up to 6.60 euros and Mediobanca in 30 cents, up to 6 euros.7

Strong downgrade of Exane BNP Paribas

Of course, the new downward valuation of Exane BNP Paribas yes it is striking. The experts of the French entity changed their recommendation from “overreturn” to “neutral” with a cut in the 12-month target price of 17.8 percent, to 6 euros from the previous 7.30 euros that placed it as one of the most optimistic firms with BBVA.

After the modifications, the majority of the experts on the Bloomberg panel, 53.1 percent, recommended “buying” BBVA shares, for 40.6 percent that urged to “keep” the securities in the portfolio and 20 , 7 percent who prefer to “sell” the shares.

The resulting average target price is 6.53 euros, so when trading above 5.5 euros it offers a potential for revaluation of more than 20 percent.

Investors doubt Garanti …

Regarding the current price, the announcement of the offer on Garanti, where BBVA prioritized the loot over risk as a way to escape the low performance in Spain, was punished by investors.

The punishment continued with Investor Day to close the week with a loss of 10 percent that cut the annual profits of the entity in the stock market to 40 percent.

… And also the ROTE

Critical experts with the new strategy of the entity, proposed until 2024, focus on the announcement of profitability based on the ROTE, of 14 percent, above the average of 10 percent expected by the market consensus.

Some analysts, such as those of Deutsche Bank, they already considered 10 percent as a “healthy” level, while Bank of America It was the only investment giant to come close to the target announced by BBVA by forecasting 12-13 percent for 2023-2024.

The economists of Bloomberg Intelligence directly qualify the ROTE announced as “inexplicable, with few explanations and visibility in this regard.”



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