On Tuesday, Citi updated its outlook on Banco Bilbao (NYSE:BBVA) Vizcaya Argentaria SA (BBVA:SM) (NYSE: BME:BBVA), increasing the price target to EUR11.90 from the previous EUR11.00, while keeping a Buy rating on the stock. This adjustment comes as Citi anticipates the release of the bank's first-quarter results for 2024, set to be announced on April 29.
The revision in the price target reflects a 10% average increase in the estimated earnings per share (EPS) for the years 2024 to 2026. This increase is partially attributed to the latest interest and foreign exchange forward curves, placing Citi's estimates approximately 4% higher than the Visible Alpha consensus. The consensus is largely influenced by the bank's performance in Spain and Mexico.
Citi's new target price of EUR11.90, coupled with an expected dividend per share (DPS) of EUR0.70 for the year 2024, suggests a total potential return of around 25%. The firm reiterated its Buy recommendation for Banco Bilbao Vizcaya Argentaria SA, noting the stock's recent underperformance compared to its closest peers.
The bank's shares have decoupled from those of its closest proxies, leading to a trading position at roughly a 20% discount to the mark-to-market of its Sum of the Parts (SOTP) valuation. Additionally, the stock is trading at 6.7 times the 24-month forward price-to-earnings (P/E) ratio, which is around 13% below its long-term average.
InvestingPro Insights
As Banco Bilbao Vizcaya Argentaria SA (BBVA) prepares to release its first-quarter results for 2024, investors are closely watching the indicators that could hint at the bank's financial health and future performance. According to InvestingPro data, BBVA is trading with a P/E ratio of 7.76, which is notably lower than the sector average, suggesting that the stock may be undervalued relative to its near-term earnings growth potential.
With a market capitalization of $59.5 billion and a robust revenue growth of 18.22% over the last twelve months as of Q1 2023, BBVA stands out as a prominent player in the banking industry. The bank has also demonstrated a strong return on assets of 1.13% during the same period, highlighting its efficiency in utilizing its asset base to generate profits.
InvestingPro Tips reveal that BBVA has not only maintained dividend payments for 34 consecutive years but also showed a significant dividend growth of 265.52% over the last twelve months as of Q1 2023. This consistent dividend history coupled with a high return over the last year, with a price total return of 62.6%, could be particularly attractive to income-focused investors.
For those considering further research on BBVA, InvestingPro offers additional insights and tips. There are currently 9 more InvestingPro Tips available for BBVA, which can be accessed at https://www.investing.com/pro/BBVA. For a more comprehensive analysis, readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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