With Bancolombia Shares Fairly Valued, Credit Suisse Steps To The Sidelines

Analysts at Credit Suisse downgraded shares of Bancolombia SA (ADR) CIB from Outperform to Neutral, while boosting their price target from $38 to $40.

The firm remains bullish on the Colombian bank, and only decided to demote the stock on “valuation grounds.” After a 19 percent appreciation since March, the shares only offer 6 percent upside, based on Credit Suisse’s target price.

Moreover, room for further earnings surprises is highly limited, especially when one takes into account the end of the cycle of monetary tightening. In this context, additional upside would depend on a reduction in Colombia’s country risk or an appreciation of its currency, “uncertain assumptions in the current environment.”

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By Credit Suisse’s current estimates, Bancolombia should deliver earnings growth of 1 percent in 2016, and growth of 16 percent in 2017, as much better NII estimates have been offset by substantially higher tax rates.

However, shares seem fairly valued at current prices, and this led them to downgrade the stock to Neutral.