BOC seen entering FTSE/ATHEX 20
Deutsche Bank has upped its price target on Bank of Cyprus shares from CYP 4.31 to CYP 5.40 or EUR 9.50 per share on the basis of its forecast that first quarter earnings will jump to CYP 29 mln.
In anticipation of excellent results and heavy buying from funds, the BOC share price jumped to a fresh record of EUR 8.40 or CYP 4.83 in Greece, while in Cyprus, the share price closed sharply higher at CYP 4.72 on Tuesday.
BOC will announce its first quarter results on May 11, while the shareholders Annual General Meeting will be held on May 30 at the bank’s headquarters in Nicosia.
DB sees BOC lifting income by 19%, interest income up 21% and commission income up 17%. Total costs are seen 5% higher.
BOC shares closed Monday at CYP 4.51 on the CSE and EUR 8.14 or CYP 4.68 on ATHEX.
Referring to the Greek banking shares, DB says it views the current premium of 11% as low when compared to European multiples, based on which it has reiterated its buy on Alpha Bank, Ethniki and Eurobank.
After increasing its price target on BOC, the investment bank now sees Alpha Bank as a good takeover target.
DB analysts lifted their price target on Alpha to EUR 37.50 from EUR 36.50 previously, on Eurobank to EUR 37.50 from EUR 36 previously and on Ethniki to EUR 52 from EUR 50.50 before.
The price upgrade brings the DB target closer to the price target issued by UBS end of February, when after the full year results, UBS raised its target price to CYP 6.03 or EUR 10.49 from CYP 4.62 previously, maintaining its “buy1” recommendation.
Meanwhile, Egnatia Financial Services anticipates that BOC will post another robust set of results with net profit surging by an impressive 76.6% Y-o-Y to CYP 28.3 mln from CYP 16.0 mln for 1Q’05 and CYP 22.0 mln in 4Q’05.
FTSE/ATHEX entry?
The announcement by Cosmote that it acquired 42% of Germanos at EUR 19 per share and its statement that it intends to launch a tender offer for the remaining shares after the above transaction at the same price (before end–August) has raised hopes that Germanos will exit the FTSE/ATHEX 20 and pave the way for BOC to enter the index.
There are also valid expectations for the entry of BOC in the FTSE/ATHEX 20 index before August if Hyatt exits the index following its takeover by a private group.
The entry of BOC in the FTSE/ATHEX 20 is seen as extremely favourable for the stock since it will force all Greek funds tracking the performance of the Footsie 20 to include the shares of BOC in their portfolio, which will add to greater demand for the stock.
