Equity
ANALYST VIEW - Hungary's OTP downgraded again
- Morgan Stanley has lowered its rating for Hungary’s OTP to ‘Neutral’ from ‘Buy’, which comes after a downgrade by Citigroup last week (also to ‘Neutral’ from ‘Buy’), on expectations that pressure on margins will rise in Hungary, Russia and Bulgaria due to decreasing interest rates; lending growth will be muted on key markets; risk costs will rise; the Hungarian government may raise the bank tax again, as it will seek funding for rising expenditures en route to the 2018 election, as well as the fact that the share price has already risen 33% this year, while a profit turnaround is already over and the share is no longer cheap, and that investors’ perception of the bank could deteriorate as management spends excess liquidity on acquisitions rather than on dividend payment. Citi upped its target price for OTP to HUF 8,600, but it is only 10%over the current share price.
- The latest ratings for OTP are: 6 ‘Buy’, 10 ‘Hold’ and 3 ‘Sell.
- The average target price is HUF 7,700, which is 5% under Tuesday’s closing price (HUF 8,197).
