Shares of Banco Sabadell held up reasonably well to the falls experienced by the rest of the market during the convulsive month of September.
The Catalan entity has found new catalysts to continue adding to the parquet. Among them, the possible sale of its payment division, for which the Italian was interested nexiFrench world line and the American fiserv.
Subscribers to Inversión magazine have already been warned in advance that the share price could break 0.7 euro with an initial target of 0.8 euro, which has finally come true.
This is precisely the main resistance to be overcome during the next sessions, as Monday’s setbacks show. With the arrival at current levels, a trading strategy can be deployed at Banco Sabadell with two possible scenarios.
Two trading scenarios at Banco Sabadell
- The shares are trading above the lows harvested last August, and on an important area like 0.75 euros, a level where there are disputes between bidders and candidates, he told Finanzas.com Diego Morinanalyst at IG.
- A first trading alternative is to wait for an additional correction from Banco Santander, up to 0.72-0.735 euros, in accordance with the strategy proposed by the director of analyzes of Inversión magazine, Josep Codina.
- Here, at 0.72-0.73.5 euros “a redemption could be attempted if the value arrives, with a stop loss at 0.67 euros”, specifies Codina.
- The alternative option is to wait for the Banco Sabadell share to break above 0.8 euro, the current resistance which has held back the advance in the very short term.
- In this case, Codina said, a long entry can be considered with a target of 0.92 euros for the year in February, placing the stop at 0.75 euros.
Banco Sabadell convinces with its fundamentals
- For fundamental reasons, the Catalan entity “benefited from the ECB rate hike,” Morín said.
- According to the IG analyst, the expert consensus “sees an interesting look in its revenue forecast for the end of the year, with the possibility of growth in the years to come”.
- Additionally, Banco Sabadell is trading at an “undemanding” valuation, JP Morgan analysts said. Specifically, these experts quoted a P/E ratio of 5x and a book value of 0.3x.
- In addition, in the American bank, they calculate that the entity will show a return of 7% on the net value of its assets in 2024, even discounting the impact of the Sánchez tax on financial entities.
- However, while it is true that analysts’ consensus gives Banco Sabadell a yield on the Ibex 35 of more than 30%, “some caution is called for due to its high volatility”, Morín reminded.
Rebound in the year of 30%
Given this outlook, it’s no surprise that Banco Sabadell shares are up nearly 30% on the year, something neither Banco Santander (-14%) nor BBVA (-9%) can say.
Impeccable compliance with the strategic plan has enabled the bank to achieve its return on tangible capital (ROTE) objective in advance, already above 6%.
And with the good performance of TSB, the British subsidiary, it is one of the levers which has most inflated the value on the floor, explain market sources.
Now the bank is looking to put the icing on the cake of a good stock market year with the sale of the payments business, a move accelerated after César González-Bueno became the entity’s CEO last year.
These types of transactions are not uncommon among banks. This is precisely what Caixabank did in early 2020. The idea is to focus on the financial aspects of the business and leave the management in the hands of a third party.
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