Analysts remain optimist as BCP loses 10% in value

While BCP’s shares are being negotiated at around 20 cents/each as the bank is accumulating significant losses, analysts predict the price will go up to 30 cents. Despite the fact that the bank has little to do with this devaluation – which was mainly caused by external factors – investors can now use this moment to purchase shares of the Portuguese bank. Nonetheless, doubts still haunt the future of this institution.

The average target price is 33 cents per share, representing a potential valuation of almost 65% relative to its current value. Over the last weeks, the average target price has even been registering a slight increase from the initial 32 cents as analysts are recommending to “buy”, according to Reuters.

“A support level of 18.80 cents is quite appealing for medium-term buyers, finding excellent opportunities at this stage”, José Bebiano Correia, Account Manager at XTB, told ECO.

Such optimism is partially due to the fact that BCP’s losses are related to external factors. Shares devaluated 10% this year, reaching a two-year minimum this Monday, representing a 28% loss relative to the last maxima. This loss cycle is taking place for a month now, despite the bank registering profits of 170M€ (+12%).

“Shares faced a strong sell wave over the last week. Such movement started even before the semester’s results presentation. If it is true that results were shown in the second trimester of the year contrast with the first three months as some investors might have anticipated such a scenario, the dimension of such losses demands additional explanations”, a market source stated.

Miguel Maya ignores as expects recovery

Miguel Maya, BCP’s CEO, provides the Press with some explanations, de-dramatising the situation in stock. The CEO considers that BCP will mirror its effective and solid banking activity instead of external uncertainties, considering that activity growth will compensate the existing pressure over financial margin as assured, in a statement to ECO, that strategic goals are being accomplished.

Analysts confirm this version. Correia considers that the impact of macro-economic factors on the bank’s activity is “obvious”. The European Central Bank indicated that it will launch a new incentives package by the end of this summer as waved the market with the possibility of cutting reference interest rates down, which will bring extra difficulties to the banks’ financial margins (which are the difference between interests charged on loans and the ones paid on deposits).

“The accentuated losses of BCP in the stock exchange can be partially explained by the ECB’s reference interest rate’s reduction. On the other hand, there are risks associated with the US-China trade war, which is increasing the market uncertainties as well as soaring the haven assets value”, Bebiano Correia added.

Sonangol and Pharol are not being a great help either

“Some speculations around eventual changes on BCP’s shareholding structure composition” might have contributed to the losses, but Correia recalls that “they are nothing else but speculations”.

Angolan media outlets, though, have announced a month before that Sonangol was going to divest on its various financial operations, not only alienating assets in some Angolan banks but also in BCP. However, no Sonangol’s official source confirmed this story.

Besides that, BCP was forced to keep 9.99% of Pharol as the bank enforced its loan guarantees against the Brazilian High Bridge for non-compliance. However, BCP has already announced its intention of selling that part of the share, which might increase its own liquidity.