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fresh money, share buyback and 30% potential

BBVA seen by market experts

BBVA is placed, at the end of the first half of the year, as the fifth best value of the Ibex with a market capitalization of 35,733 million despite the fact that Cellnex has won the game, and with an iron health according to the experts. It has cut expenses and has divested in the US with capital gains, which lead him to implement significant cost savings, to strengthen the company.

BBVA shareholding structureBBVA shareholding structure

BBVA shareholding structure

From Renta 4 the financial analyst Nuria Álvarez highlights that her efficiency plan in Spain is a starting point, with an estimated savings of 65 million this year and 250 million from 2022 to improve its profitability, since it will allow it to raise its efficiency ratio in Spain to 49% ”. BBVA therefore closes the semester in a frankly favorable environment, compared to what was expected before the beginning of the year, with advances that exceed 31% so far this year ”.

For María Mira, fundamental analyst of Investment Strategies “the aspects that in my opinion are marking and will mark the way between now and the end of the year are in the first place, the expectations of when the long-awaited (for banks) rate hike in Europe will start ”.

He states that “all the news about interest rates directly affect the sector and is that the bank is hypersensitive to the price of money, both negative (as it has been discounted so far) and positive, something that should begin to discount. With nothing that rates rise, the profitability of the bank will be favored. Therefore, here I believe that the outlook has already begun to change and it could be a catalyst to see the upward turn in interest rates closer ”.

Secondly- says María Mira from Ei- it is also very important, the evolution of the default rate. At the moment it seems that it is contained, controlled and does not finish emerging. Perhaps the ICO aid and all the refinancing measures for SMEs, ERTEs, etc. they have managed to cushion what could have been a much more stressed NPL ratio. Therefore, if it is kept under control, it will also be a catalyst for banks and, therefore, for BBVA ”.

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BBVA annual price of the stockBBVA annual price of the stock

BBVA annual price of the security

And it highlights that also “at the sectoral level, the market will be monitored and will be discounting the force of irruption in the market of competition for traditional entities (Neobanks, fintech, telcos …) and at the same time, it will be important to analyze how each entity, and specifically BBVA, adapts to this new competition ”.

Susana Felpeto, Director of Variable Income at Atl Capital points out that the evolution of BBVA “it will depend greatly on whether there is negative news or the situation in Turkey is complicated, for its strong exposure. And this is its fundamental difference with entities like Santander is its exposure to emerging markets. And from Atl Capital we think that with Economic recovery and tending towards a rate hike in the US towards 2023, although in Europe we are lagging behind, along with inflation logic tells us that it will be beneficial to value ”.

In his opinion “we we are not positive in the sector in a strategic way, it would be more tactical, because we believe that the margins are still very tight, but we do believe that in the long term there may be a positive behavior if the part of Turkey is not complicated ”.

BBVA and its geographic diversification BBVA and its geographic diversification

BBVA and its geographical diversification

From Renta 4 they consider that “Cost savings, along with adjusting the capital gain derived from the sale of the business in the United States, 267 million of the remaining pending 90 million euros and the improvement in risk cost estimates in Mexico and Turkey ”led him to improve up to overweight the board over the stock, with a target price of 6.8 euros per share. This represents a potential for BBVA of almost 30%.

From Ei, the fundamental analyst María Mira highlights that “it has significant liquidity and that it even seems to be increasing with more divestments such as the sale of its depository business for € 400 million. This liquidity, the entity has to move and invest it, otherwise it will be unproductive and will depreciate ”.

He states that “obviously looking for a good destination for this liquidity takes time. He has already tried it with Sabadell and now I hope so, that he is already analyzing other opportunities, both in the Spanish market and, why not, at the European level. If, as Lagarde seems to suggest, as of September the authorities lift the dividend limits shareholders could also receive a good pinch of this liquidity ”.

Returning to Turkey, Susana Felpeto, from atl Capital considers that after “the circumstances that occurred with the fall of the president of the Turkish central bank with which BBVA ruled out expanding its presence in Garanti, given the effect on the value, with visibility of the volatility that it can give you that exposure. And since at the moment they have not expanded it, We do not rule out that in the future he may try a merger with Sabadell again, which would balance its exposure between emerging and developed countries ”.

María Mira from EI points out that “it would be a more than correct decision a corporate operation that will facilitate cost synergies and at the same time it will position the resulting entity in a good position against all this new competition. And as for the possible catalysts and specific risks for BBVA in the medium term, I highlight, on the one hand, the geographical risk with a very notable weight in the business of the Group in Turkey and Mexico. These two countries bring high risks, political instability, increased default, risk of currency devaluation, very high inflation, … “

From ATL Capital, its director of equities Susana Felpeto affirms that BBVA “It has exceeded the levels of 5 euros per share, which was a significant resistance. The next level is approximately 5.65 euros, which, if exceeded, could reach 6.5 euros per share. Now the fundamental thing is that it does not break downwards that level of 5 euros per share, because then we could put a stop, since it could correct to the minimum that it did in April, slightly below 4.5 euros ”.

From a technical point of view, José Antonio González, technical analyst at Investment Strategies, highlights that the value “maintains the growing structure intact, although the gradual fall in the contracting activity reduces the reliability of the movement in the short term, while the price approaches the zone of significant resistance comprised around 5,677 / 5,581 euros per share. In this way, we will not begin to appreciate the first signs of technical deterioration as long as the price remains above 5.196 euros per share, the latest short-term rising low ”.

BBVA on daily chart with average amplitude range in percentage, MACD oscillator and trading volume

BBVA technical analysis of the value BBVA technical analysis of the value

BBVA technical analysis of the value

From atl capital, Susana Felpeto, its director of variable income tells us that “A share buyback is a way of rewarding the shareholder, from our point of view more than valid and without going through taxation. And if they do not find a better option in the market where to invest the money with the benefits obtained, invest in its value, at a very common American level. It seems positive to me ”.

Also, Nuria Álvarez de Renta 4 points out that “the share buyback of 10% of the capital, scheduled for November will have a capital consumption of around 1 pp, which would place the “fully loaded” 2021 CET 1 ratio at levels of 13.75% ”.

BBVA high solvency capital levels BBVA high solvency capital levels

BBVA high solvency capital levels

And to conclude, says María Mira, fundamental analyst at Ei that “in synthesis and monitoring all these possible catalysts and risks, My forecast is for a mild upward trend for BBVA stocks until the end of the year, without major revaluations, but holding on, waiting to know the evolution of these factors. It is not expensive due to its fundamentals and it seems that the future, except for great surprises, will be resolved positively ”.

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