On Friday, Deutsche Bank reiterated its Buy rating on Banco Bilbao (NYSE:BBVA) Vizcaya Argentaria SA (BBVA:SM) (NYSE: BME:BBVA), with a price target of EUR11.40. The firm's stance comes after BBVA held a CEO lunch with sell-side analysts, focusing on the bank's offer for Sabadell. The discussion did not yield new information regarding the offer but aimed to provide a clearer understanding of the strategic move.
The analyst from Deutsche Bank highlighted that the anticipated value from BBVA's proposal to acquire Sabadell would largely come through economies of scale. This approach suggests that the benefits for Sabadell's shareholders are sufficiently addressed in the current terms of the offer. Consequently, the analyst indicated that there seems to be no justification for BBVA to increase the offer terms.
BBVA's strategy with the potential acquisition is to leverage synergies that would benefit both institutions. The analyst's comments reflect a positive outlook on the deal, implying that BBVA's management has effectively communicated the advantages of the proposed merger.
The reiteration of the Buy rating and the confirmation of the price target indicate Deutsche Bank's confidence in BBVA's current valuation and its prospects following the potential acquisition of Sabadell. This endorsement by a major financial institution could influence market sentiment towards BBVA's stock.
BBVA's stock performance and investor decisions may be influenced by such evaluations from financial analysts. The bank's efforts to elaborate on the benefits of the offer for Sabadell suggest a strategic initiative to consolidate its position in the market without altering the proposed terms of the deal.
In other recent news, Banco Bilbao Vizcaya Argentaria (BBVA) has reported a record net attributable profit of EUR 2.2 billion for Q1 2024, marking a 19% increase from the previous year, with earnings per share (EPS) rising by 23% year-over-year. Concurrently, BBVA has made a hostile takeover bid for Sabadell, which is currently under review by Sabadell's board. The bank's CEO, Cesar Gonzalez-Bueno, has stated that Sabadell does not intend to engage in mergers and acquisitions as a defense strategy against the bid.
Meanwhile, Berenberg has initiated coverage on BBVA stock, assigning a Hold rating with a price target of $10.10, and anticipates the bank's net income to increase by nearly double digits year-over-year in 2024. These are all recent developments for BBVA, which has also seen strong customer growth and substantial strides in sustainable business, channeling EUR 20 billion into this area with a target of EUR 300 billion by 2025.
Sabadell has communicated with its retail shareholders and has sought the expertise of Goldman Sachs and Morgan Stanley following BBVA's initial bid. The bank's chairman, Josep Oliu, has indicated that the takeover process could extend into late 2024 or 2025. Despite these developments, BBVA remains focused on its strategic initiatives and organic growth.
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