Bank of America Upgrades BBVA

Bank of America upgraded Banco Bilbao Vizcaya Argentaria SA (ADR) BBVA from Underperform to Neutral Monday and cut its price target from $11 to $10.49.

The analyst report noted that the share price is down 9 percent YTD and now offers little downside.

Analysts led by Sergio Gamez noted that “BBVA announced on 19 November the acquisition of 14.89 percent stake in Garanti from the Dogus group, increasing its share to 39.9 percent at a max TRY8.9/sh (no premium to the closing price).”

“To fund the transaction, BBVA declared a €2bn accelerated bookbuilding offer, implying a c.4 percent share-count increase. The deal adds c.1 percent to 2015-16E EPS and is NAPVS accretive on our estimates,” according to Gamez

Gamez observed that the “acquisition makes BBVA the main shareholder (39.9 percent) in a leading franchise (c.11percent market share) in the attractive Turkish banking sector. It also adds potential growth to BBVA’s P&L and increases the group’s geographical diversification.”

“Our main concern relates to geopolitical risk in Turkey and the franchises in Venezuela and Argentina,” the report concluded.

Banco Bilbao Vizcaya Argentaria SA (ADR) recently traded at $10.60, up 2.32 percent.