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On Thursday, Citi analysts, led by Marta Romero, increased the price target on Banco Bilbao (NYSE:BBVA) Vizcaya Argentaria SA (BBVA:SM) (NYSE: BME:BBVA) shares to €14.00, up from the previous target of €12.60, while reiterating a Buy rating on the stock. The revision comes after the firm updated its earnings projections for BBVA, anticipating higher profits across several key regions. The bank’s stock, currently trading near its 52-week high of $13.05, has delivered impressive returns with a 30% gain year-to-date and maintains a favorable P/E ratio of 7.26x. According to InvestingPro analysis, the stock appears overvalued at current levels, with 12 additional exclusive insights available to subscribers.
The analysts adjusted their 2025–2027 earnings per share (EPS) estimates upwards by an average of 8%, based on stronger than expected earnings from operations in Spain, Mexico, Turkey, and other business areas. This increase more than compensates for a slightly lower expected contribution from South America. As a result, Citi’s EPS forecast now stands 9% above the Visible Alpha consensus for the same period. With a market capitalization of $73.38 billion, BBVA has demonstrated strong financial health, achieving a 19% revenue growth in the last twelve months.
Citi’s analysts remain confident in BBVA’s ability to achieve a return on tangible equity (ROTE) of 18% on average over the next three years. This robust performance is expected to allow for approximately €5.4 billion in annual returns to shareholders through dividends and buybacks, which equates to a yield of about 8%. Furthermore, the bank is projected to build its capital to 13.1% by the end of 2027, which would be €4.6 billion above the 12.0% threshold, representing 6% of the market cap. InvestingPro data reveals BBVA has maintained dividend payments for 35 consecutive years, currently offering a 4.05% yield, with dividends growing 86.5% in the last year.
The report suggests that the current valuation of BBVA’s shares, trading at roughly 7.5 times the 24-month forward price-to-earnings (P/E) and approximately 1.4 times the price-to-tangible book value per share (P/TBVS), is attractive. This valuation, coupled with the bank’s financial outlook and potential for shareholder returns, underpins Citi’s Buy recommendation for BBVA stock. For a deeper understanding of BBVA’s valuation and growth prospects, access the comprehensive Pro Research Report available exclusively on InvestingPro, offering detailed analysis of this prominent banking institution.
In other recent news, Banco Bilbao Vizcaya Argentaria S.A. (BBVA) has received a positive outlook revision from Fitch Ratings, affirming its Long-Term Issuer Default Rating at ’BBB+’ and Viability Rating at ’bbb+’. Fitch anticipates improved financial results, driven by BBVA’s solid franchise and effective risk management, particularly in key markets like Spain. Additionally, Citi analysts have raised their price target for BBVA shares to EUR 12.60, maintaining a Buy rating based on the bank’s strong performance and anticipated earnings growth. The analysts expect the upcoming fourth-quarter results to provide further insights into strategies for sustaining earnings growth and return on tangible equity in 2025.
Meanwhile, BofA Securities has upgraded BBVA’s stock rating from Neutral to Buy, setting a new price target of EUR 13.00. This upgrade is attributed to BBVA’s high-quality franchise, sustainable revenue streams, and potential acquisition of Sabadell, which could enhance its market position. Analysts at BofA Securities see a 30% upside potential, highlighting BBVA’s return on tangible equity premium compared to peers. These developments underscore the bank’s robust business model and prospects for future growth and profitability.
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