Banco Marco Upgraded To Buy At Goldman Sachs

With the Argentine economy at an inflection point and inflation showing signs of deceleration, Goldman Sachs’ Carlos G. Macedo believes Banco Macro SA (ADR) BMA is well positioned to make the most of this cycle.

Macedo upgraded the rating on the company to Buy, while raising the price target from $83.90 to $86.50.

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Stock To Outperform

As growth returns to Argentina, the analyst expects the stock to outperform, despite its current multiple appearing expensive as compared to its peers.

“Inflation in Argentina is starting to decline, which we believe will increase medium-term visibility and allow banks to become more aggressive in lending,” Macedo mentioned.

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Loan Growth

The analyst expects Banco Macro’s loan growth to accelerate from -2 percent in Q3:16 to more than 20 percent by 2019, which in turn is expected to drive robust earnings growth.

According to the Goldman Sachs report, “Banco Macro has the strongest capital position of the major Argentine banks. In a strong recovery in lending, this strength should allow the bank to be more aggressive in pursuing opportunities and could translate to sustainable gains in market share.”

Lending Growth

In fact, Banco Macro succeeded in accelerating lending growth as of Q2:16, despite peers witnessing a contraction. Macedo noted that the company’s business mix was also less of a disadvantage.

However, the primary disadvantage, as compared to peers, is the company’s weak retail presence “in the most economically dynamic region of the country.”

Full ratings data available on Benzinga Pro.