Coronavirus crisis, collapse of the Turkish lira, Villarejo scandal … BBVA has many fronts open, perhaps too many, which has been reflected in the price of its shares, which trade at 2.50 euros, close to the 2009 lows (2.33 euros), which has reduced its market capitalization to 16,600 million euros.
The last analysts who have reduced the valuation of their titles have been those of Goldman sachs, who recently lowered their target price by 8%, to 3.44 euros from the previous 3.74 euros per share. Goldman advises to buy his actions, because he anticipates a very interesting upside potential of 37% over the current price, but at the same time highlights the risks that the entity faces.
The American entity fears that materialize the 'adverse' case of your scenario analysis. Thus, Goldman mentions "any financial, reputational or other impact of any ongoing investigation in Spain or elsewhere".
Its experts refer to 'Villarejo scandal', which has splashed the former president of the entity, Francisco Gonzalez, and that it is still open and is being investigated by the Central Court of Instruction 6 of the National High Court. The possible repercussions of this matter will undoubtedly be a source of instability in the coming months, as Goldman anticipates.
Another major risk for the US bank is "a material and credible increase in macroeconomic and geopolitical risks in Turkey and / or Mexico." In this sense, new all-time lows for the Turkish lira against the dollar have been another hard blow for the entity chaired by Carlos Torres. Analysts believe that the attempt by the Turkish authorities to defend its currency is not working and they anticipate more volatility in the coming weeks and months.
Finally, Goldman mentions as another relevant risk "an increase in the correlation of European and Latin American business cycles". Mexico It is the bank's main source of profits, but the Aztec economy has been hit hard by the pandemic. He Mexican GDP plummeted 17.3% in the second quarter of 2020, its biggest setback in history, at a time when Spanish GDP has also collapsed.
This implies that BBVA will have a much more difficult time offsetting the crisis in Spain with its Mexican business, which undoubtedly represents an additional risk for their results in the coming quarters.
By technical analysis, BBVA has "an important support area in the price range between 2.40-2.45 euros. Or rather, it is key that said support zone is respected at all times, since the following would be a movement towards the 2009 lows, at 2.33 euros", it states Jose Maria Rodriguez, an analyst at Bolsamanía.
"The Piercing the 2009 lows would be a very strong sign of weakness, because there are really no support references to much lower price levels. References unthinkable at this market moment ", adds this expert.
So things, BBVA faces a very complicated 'start to the year', with too many open fronts and a very adverse economic scenario. And all this with the stock close to 11-year lows.
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