Banco Santander Brasil Upgraded, Price Target Raised 39% By Credit Suisse
Credit Suisse upgraded Banco Santander Brasil SA (ADR) (NYSE: BSBR) to Neutral from Underperform on better-than-expected execution, resilient asset quality, strong cost control and repricing strategy.
However, valuation prevents the brokerage to take more constructive stance on the stock on which it raised the target price to R$25 from R$18.
Credit Suisse also raised its net profit estimates for 2016 and 2017 by 8.4 percent and 14.2 percent, respectively, mainly due to stronger fee revenues and lower effective tax rate.
“In our view, solid management execution should likely lead the bank to sustain the inspiring performance of its fee generating businesses and to keep core opex under control,” analyst Marcelo Telles wrote in a note.
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Further, Telles expects more volume and NII growth than peers in 2017 (+3.0 percent in 2017 and +6.6 percent in 2018), driven by slightly higher risk appetite.
“Accordingly, NII should also increase at a more solid clip, fueled not only by loan growth, but also by lower interest rates, increasing credit spreads, and better credit mix (higher yield segment are gaining relevance),” Telles continued.
In addition, the analyst pointed out that the company’s resilient asset quality suggests that Santander is still bearing fruits from its de-risking efforts.
“We now anticipate R$10.8 billion in net provisions in 2016 (+4.3 percent y/y) and R$8.6 billion in 2017 (-14.9 percent y/y). We also believe the bank is less exposed to the risks of the large corporate sector in Brazil,” Telles added.
ADRs of Banco Santander closed Friday’s trading at $7.36.
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Latest Ratings for BSBR
Oct 2016 | Credit Suisse | Upgrades | Underperform | Neutral |
Jan 2016 | HSBC | Downgrades | Hold | Reduce |
Nov 2015 | JP Morgan | Downgrades | Outperform | Market Perform |
View More Analyst Ratings for BSBR
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