On Friday, UBS increased its price target for Eurobank Ergasias SA (EUROB:GA) (OTC: EGFEY) shares to €2.74, up from the previous €2.60, while maintaining a Buy rating on the stock. This adjustment follows Eurobank's second-quarter earnings, which surpassed consensus estimates by 9%.
UBS has updated its forecast for Eurobank's adjusted earnings per share (EPS) for fiscal year 2024, increasing it by approximately 4% for the period between 2024 and 2026. The firm's projections now stand at roughly 5% above the consensus by fiscal year 2026.
Additionally, Eurobank's fiscal year 2024 guidance has been revised upward, with a return on tangible equity (ROTE) anticipated to be around 16.5%, an increase from the earlier estimate of approximately 15%.
The revised price target represents a 5% increase and factors in the valuation and forecast tables provided by UBS. The firm's analysis suggests that the bank's financial health is robust, with a common equity tier 1 (CET1) ratio expected to remain above 17% over the next three years.
UBS also notes the potential for further upside from Eurobank's conservative assumptions regarding Hellenic Bank Cyprus, which will be consolidated starting from the third quarter. The firm views Eurobank as offering an attractive balance between growth opportunities outside of Greece and capital flexibility.
In other recent news, Eurobank Ergasias SA reported strong results for the first quarter of 2024, with an adjusted net profit of €383 million and a return on tangible book value of 20%.
The bank's core operating profit reached a record €407 million, while asset quality improved, as evidenced by a non-performing exposure ratio decrease to 3% and coverage reaching a new high of 93%. Eurobank's capital ratios remain robust, with the fully loaded CET1 ratio at 17.2% and the total capital ratio at 20.2%.
The bank's strategic initiatives, such as the acquisition of Hellenic Bank, are progressing well. Eurobank has submitted a dividend distribution application, proposing a 30% payout ratio, subject to supervisory clearance and approval at the Annual General Meeting.
UBS has raised its price target for Eurobank shares to €2.74, up from the previous €2.60, maintaining a Buy rating on the stock. This adjustment follows Eurobank's second-quarter earnings, which surpassed consensus estimates by 9%.
UBS also updated its forecast for Eurobank's adjusted earnings per share for fiscal year 2024, increasing it by approximately 4% for the period between 2024 and 2026. These recent developments highlight Eurobank's financial strength and growth potential.
InvestingPro Insights
InvestingPro data indicates that Eurobank Ergasias SA (OTC: EGFEY) is currently trading at a low Price-to-Earnings (P/E) ratio of 6.06, with an adjusted P/E ratio for the last twelve months as of Q2 2024 at an even lower 5.37. This suggests that the stock could be undervalued relative to its near-term earnings growth, particularly when considering the company's PEG ratio for the same period standing at 0.5, which might appeal to value-oriented investors.
Despite concerns about weak gross profit margins, analysts on InvestingPro have noted that Eurobank has been profitable over the last twelve months, and they predict the company will continue to be profitable this year. Additionally, the bank has shown a strong return over the last five years, which could signal a potential turnaround in its price performance, as reflected in the year-to-date price total return of 30.41%.
Investors interested in a deeper analysis can explore additional InvestingPro Tips, which provide further insights into Eurobank's financials and performance metrics. There are currently 9 additional tips available for Eurobank on InvestingPro that could help in making a more informed investment decision.
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