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Values Where Furrows Appear To Sow

The central bankers’ camp that took place at the end of last August, and where the intention to continue tightening monetary policy with the aim of taming the runaway inflation that plagues a large part of the world’s economies became clear, has not done but to improve the recommendations of half of the Ibex 35 firms.

This punishment that hung over the stock markets, since a rise in interest rates translates into widespread fear that the economy will enter a recession, has added attractiveness to 17 companies of the Spanish selective, since the correction they have suffered on the stock market since then has not been accompanied by a snip in its earnings forecast for this year.

An equation that leaves these securities with a more interesting PER (times the expected profit is included in the share price) than the one they offered at the end of August. Therefore, a multiplier that works in their favor and that has already been included in their recommendation given by the consensus of experts collected by FactSet.

It should be remembered that, since the annual meeting of central bankers (on August 25, 26 and 27), which was held in the Grand Teton National Park (in the state of Wyoming, United States) and in which central bankers were summoned from around the world, academics, influential economic thinkers, policy makers and journalists, the European Central Bank (ECB) has announced a new increase (in addition to the one it executed in July, of 50 points) of 75 basis points, that is to say , the most forceful of the organism to date. An increase that, together with the bad macro data, leaves the Ibex as the continental index that lost the most in September, with 6.59%.

For Sergio Ávila, an IG analyst, “the improvement in the recommendation by investment banks does not imply that it is a good time to buy the shares, even though they may be undervalued.” In this regard, the expert adds that, in his opinion, “the market will not stop falling until we see the 10-year US bond yield above 4.5%, weekly applications for unemployment benefits exceed 350,000 and that the Fed already pronounces that it has reached the limit of rate increases. For this there is still, but from there we could still have better valuation ratios than the current ones and buy the companies even cheaper than now, “he clarifies .

Juan José Fernández Figares, director of the Analysis Department at Link Securities, considers that, probably, “the upward revisions are more linked to the results of the first half of the year”, since, in many cases, they have exceeded expectations.

Thus, the expert warns that “from now on, I believe that, with the accelerated deterioration of the macro environment, the most likely thing is that the revisions of estimates, valuations and recommendations will begin to be downward. I think that is what is discounting the market. The difficult thing at the moment is to determine whether investors have already completely discounted these reductions or not. That is my doubt and that of a large part of the market”.

Rovi, at the head of the improvements
The pharmaceutical company Rovi , which after Cellnex Telecom is the firm with the best recommendation on the Ibex, according to the consensus collected by FactSet, is the one that has seen the most improvement in its advice. The company, which has fallen 11% since the Jackson Hole meeting, has not suffered the same blow in the profit forecast as on the stock market, and its price is up to two points cheaper than it was at the end of August, when passing from a PER of 14.8 times to a current multiplier of 12.8 times.

After this, Endesa – which also raises the buy sign – is the second that sees its recommendation improve the most in this interval. Bankinter closes this top 3, which, although it continues with a hold recommendation, is on the verge of having a purchase advice. Of the Ibex banking entities, CaixaBank and Banco Sabadell –with respective buying advice– are also part of the quota of firms that improve their recommendation. Thus, of these 17 firms, eight have the best possible advice, that of purchase.

Looking at Europe, however, 42% of EuroStoxx stocks have also seen their recommendation improve since the central bankers’ conclave. From this ranking, EssilorLuxottica, designer, manufacturer and distributor of ophthalmic lenses, is the European that most improves its advice –and also raises a purchase sign–, followed by Volkswagen and Enel.

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