BBVA stock rating upgraded to Hold at Kepler Cheuvreux

On Thursday, Banco Bilbao (NYSE:BBVA) Vizcaya Argentaria SA (BBVA:SM) (NYSE: BME:BBVA), a $77.49 billion banking giant, received an upgrade in its stock rating from Kepler Cheuvreux, moving from Reduce to Hold, accompanied by a significant increase in the price target to EUR12.80, up from the previous EUR9.27. According to InvestingPro data, the stock is trading near its 52-week high, having delivered an impressive 29.51% return over the past six months.

The upgrade comes as BBVA shows continued strong growth in Mexico and a promising shift in Turkey. The bank’s financial strength is evident in its attractive P/E ratio of 7.68 and consistent dividend payments, maintained for 35 consecutive years with a current yield of 3.82%. However, the bank is also facing challenges such as slower lending and geopolitical risks. In Spain, BBVA’s profitability is under pressure, but the potential synergies from the Sabadell merger are seen as an opportunity for the bank. The merger could face regulatory hurdles and issues with partial integration, which may limit the full benefits of the synergies.

Kepler Cheuvreux has also analyzed BBVA’s hedging policy in its report, which is said to play a crucial role in managing interest rate and currency risks across its key markets. This strategy is an important factor in the bank’s ability to navigate the financial landscape.

The report further explains that BBVA’s lower cost of equity (COE) has enhanced its valuation. However, the bank’s price-to-tangible book value (P/TBV) multiple suggests there is limited room for an upward re-rating of the stock.

In conclusion, the combination of BBVA’s growth dynamics, hedging strategies, and the anticipated impact of the Sabadell merger have led to Kepler Cheuvreux’s decision to raise the price target and upgrade the stock rating to Hold. Based on InvestingPro’s Fair Value analysis, the stock appears slightly overvalued at current levels. Discover 12 additional key insights and comprehensive financial analysis for BBVA, along with over 1,400 detailed Pro Research Reports, available exclusively on InvestingPro.

In other recent news, Banco Bilbao Vizcaya Argentaria (BBVA) has seen a revision in its earnings outlook, with Citi analysts raising the stock price target to €14.00 and maintaining a Buy rating. This adjustment comes after Citi increased its earnings per share estimates for BBVA by an average of 8% for 2025–2027, driven by strong performance in Spain, Mexico, and Turkey. Fitch Ratings also revised BBVA’s outlook to positive from stable, affirming its Long-Term Issuer Default Rating at ’BBB+’. This change reflects expectations of improved financial results and effective risk management in key markets.

Additionally, BofA Securities upgraded BBVA’s stock from Neutral to Buy, setting a new price target of €13.00. Analysts cited BBVA’s high-quality franchise and sustainable revenue streams as key factors for this upgrade, with a potential 30% upside in stock value. Fitch affirmed the ratings of BBVA’s subsidiaries in Mexico, Colombia, and Peru, with some outlooks revised to positive, mirroring the parent company’s rating changes.

Santander Mexico’s ratings were affirmed by Fitch, with a stable outlook, indicating the potential for support from its parent company, Banco Santander (BME:SAN). The potential acquisition of Sabadell by BBVA is also highlighted as a positive influence on the bank’s future performance, according to BofA Securities. These developments underscore BBVA’s strong market positioning and financial outlook across multiple regions.

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