Index falls as earnings results weigh; pound above $1.33, Bodycote soars
On Monday, Citi analysts made an adjustment to Credicorp's (NYSE:BAP) stock price target, bringing it down to $215 from the previous $225, while maintaining a Buy rating on the shares. Currently trading at $181.31 with a market capitalization of $14.4 billion, the stock sits within analyst target ranges of $170-$225. According to InvestingPro data, Credicorp maintains a "GOOD" overall financial health score. The financial institution is set to report its fourth-quarter results for 2024 on February 10, and analysts are anticipating that macroeconomic tailwinds will continue to foster a healthier risk appetite and asset quality. The company has demonstrated strong financial performance, with revenue growing at 8.7% over the last twelve months and maintaining dividend payments for 26 consecutive years, currently offering a 5.1% yield. This expectation is based on the monthly performance trends observed at Banco de Credito del Peru (BCP) and, to a lesser extent, at MiBanco through November.
Credicorp's upcoming earnings report is also influenced by the provisioning case of Sartor, a factor that Citi has included in a sensitivity analysis. The analysis considers the potential impact on the company's earnings for both the fourth quarter of 2024 and the full year. Despite the downward revision in the price target, the analysts remain optimistic about Credicorp's future, citing a projected net interest margin (NIM) resilience, anticipated positive loan growth, and a decrease in the cost-of-risk as drivers for an estimated 12% year-over-year earnings growth in 2025.
The adjustment in Credicorp's price target is primarily attributed to the Sartor provisioning case and new foreign exchange (FX) assumptions. While the specifics of the Sartor case were not detailed, it is clear that its resolution has been factored into the financial forecasts and has impacted the valuation of the company's stock.
Citi's reiteration of the Buy rating for Credicorp indicates confidence in the bank's potential for continued growth and profitability. The financial institution, with its subsidiaries, provides a range of banking and financial products and services in Peru and internationally. Investors will be closely watching the upcoming earnings report to gauge the accuracy of Citi's projections and the health of Credicorp's financial standing as it navigates through the economic landscape of the region. With a P/E ratio of 10.3 and projected earnings of $19.08 per share for 2024, the company shows promising fundamentals. For deeper insights into Credicorp's valuation and growth prospects, including 8 additional ProTips and comprehensive financial analysis, visit InvestingPro.
In other recent news, Credicorp Limited reported a record net income of PEN 1,523 million and a robust return on equity (ROE) of 18.5%. This strong financial performance was highlighted in the company's Third Quarter 2024 Conference Call. The company also announced the acquisition of the remaining 50% stake in a joint venture with Empresas Banmedica and the receipt of provisional approval for its digital wallet, Tenpo, to establish a banking entity in Chile.
The company's strategic initiatives aim for 10% of risk-adjusted revenues from new businesses by 2026, and the company maintains strong GDP growth projections for Peru. Additionally, Credicorp's digital and healthcare ventures have made substantial progress, despite global economic uncertainties.
However, the company also acknowledged a 16% quarter-over-quarter decline in net income, attributed to the discontinuation of the Corporate Finance unit and less favorable treasury results. Operating expenses also increased due to disruptive initiatives. These are recent developments that investors should consider when assessing the company's performance.
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