Popular Upgraded At Morgan Stanley; Firm Says Biggest Negative Has Passed

Loading...
Loading...
In a report published Tuesday, Morgan Stanley analyst Ken A Zerbe upgraded the rating on
Popular, Inc.
BPOP
to Equal-weight, with a price target of $31. The analyst believes that the biggest negative economic impact on the stock has now passed. "The governor of Puerto Rico made it very clear over the weekend that the island's "debt is not payable" and "there is no other option" but to restructure, which sent the shares of BPOP down 10% on Monday," Zerbe reported. The analyst believes that the company could face a potential pretax loss of $285-$382 million. Even with the potential losses due to Popular's direct exposure to Puerto Rico, the company's capital position would remain strong. "Its strong post-govt default capital position should act as a sizable buffer for ongoing volatility as the island's debt is restructured, including its ability to handle increased credit losses," according to the Morgan Stanley report. The analyst also believes that it is unlikely that the management would return capital this year, given that it has opted to remain conservative with its capital until there is an improvement in Puerto Rico's fiscal situation. Buybacks are unlikely over the next 12 months. Although Popular's shares have underperformed their mid-cap bank peers, the analyst believes that in the longer-term, there could be upside to the stock, "if the island can reduce its debt burden, freeing up more resources to support the economy."
Loading...
Loading...
date
ticker
name
Price Target
Upside/Downside
Recommendation
Firm
Posted In: Analyst ColorUpgradesAnalyst RatingsMorgan Stanley
We simplify the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...