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On Friday, Barclays (LON:BARC) initiated coverage on Banco Comercial Português (BCP:LI), assigning an Overweight rating and setting a price target of EUR0.69. Barclays analysts highlighted the bank’s robust net interest income, driven by growing volumes, and the potential for unlocking value in Poland as key factors in their positive outlook.
BCP’s projected earnings per share (EPS) compound annual growth rate (CAGR) of 14% for the period from 2024 to 2027 stands out against the European Union (EU) average of 5%. Barclays expects BCP to demonstrate a return on tangible equity (ROTE) of approximately 15% for the fiscal year 2026, with improvements anticipated in the following year that would exceed the EU average of 13.6%.
The analysts also pointed out BCP’s potential for an average yield of about 13% for the fiscal years 2025 to 2027, surpassing the EU average of roughly 9.5%. This expected yield is bolstered by a forecasted excess capital of approximately €0.7 billion (€0.05 per share) for fiscal year 2026, which constitutes about 10% of the current share price.
In terms of valuation, BCP is seen as attractive, trading at 1.04 times its tangible net asset value (TNAV) for 2026 and 6.9 times its EPS for the same year. These figures are below the EU averages of 1.1 times TNAV and 7.7 times EPS, despite BCP offering superior ROTE and EPS growth compared to the EU sector.
Barclays’ adjusted EPS estimates for BCP from 2025 to 2028 are on average 8% above the Bloomberg consensus. However, their net profit predictions for the same period are 4% below the upper part of the management’s guidance of €4.5 billion.
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