UPDATE: Bank of America Downgrades Banco Bilbao Vizcaya Argentaria SA on Valuation, Lower Earnings Estimates

In a report published Monday, Bank of America analyst Sergio Gamez downgraded the rating on Banco Bilbao Vizcaya Argentaria SA BBVA from Neutral to Underperform, and lowered the price target from $10.70 to $10.45. In the report, Bank of America noted, “BBVA's share price has increased by 37% since July on the back of better macro data, outperforming its peers (SX7P) by 19%. BBVA's 2015E P/TNAV increased from 1.0x at the end of August to 1.3x currently. On 2015E P/E, BBVA has also experienced a more positive rerating than most of its European peers. However, in the same period, our earnings forecasts have declined 14%. Following a weak Q3 that lacked catalysts, we decrease our 2014-15E estimates by 20% on the back of lower-than-anticipated NII in Spain and higher cost of risk, the impact on the P&L due to the disposal of the 5.1% stake in Citic as well as reduced expectations at the Mexican operation Bancomer. We also cut our DPS forecast by c.25% for the next two years. Our current average revenues for next year stand at €5.3bn on a quarterly basis, broadly in line with Q3 but well below the €5.7bn expected by consensus. We expect BBVA to deliver €1.7bn net profit in 2013, but after inclusion of the €2.8bn of capital gains on the disposal of some businesses in LatAm and Spain.” Banco Bilbao Vizcaya Argentaria SA closed on Friday at $11.52.
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Posted In: Analyst ColorDowngradesAnalyst RatingsBank of AmericaSergio Gamez
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