UBS Downgrades Banco Popular to Sell

UBS downgrades Banco Popular to Sell from Neutral, TP down to €0.80 from €1.30, writes in a note: « our previous assumptions about the bank’s capacity to absorb pending provisioning needs have proved too optimistic, with our new estimates showing lower coverage (46% vs. 50%) and capital (c.10% vs. c.10.8%) ratios than those targeted by management by YE16E. With the stock trading c.30% up from November lows following recent management changes, we do not see seemingly low multiples (0.5x PTBV) discounting what we see as material provisioning (€1.9bn beyond our P&L estimates) and capital (€2.4bn) deficits. »

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