Morgan Stanley Reiterates on Popular, Sustained Improvement Expected

In a report published Monday, Stifel analyst Ken Zerbe reiterated an Underweight rating on Popular, Inc. BPOP. According to the report, “The Government Development Bank for Puerto Rico released its Economic Activity Index (EAI) for November, showing a decline of 5.7% Y/Y (versus 5.4% last month). Changes in this index are highly correlated with the Puerto Rico economy, with an R-squared of 90%, making this a relevant data point for investors in BPOP.” Some highlights from the report included: -”The modest improvement in the economy that we saw during the last two months has essentially stopped.” -”Until we see sustained improvement in the Puerto Rico economy, we see little reason to get more positive on the BPOP shares.” -”We expect increasing provision expense as the economy remains weak, leading to EPS that comes in well below consensus estimates.” BPOP closed Friday at $28.79.