On Monday, BofA Securities made a notable adjustment to its stance on Security Bank Corp (SECB:PM) (OTC: SYBJF), raising the bank’s stock rating from Neutral to Buy. Accompanying this upgrade is a significant increase in the price target, which now stands at PHP136.00, up from the previous target of PHP77.00.
The firm’s analyst cited a robust growth outlook as the primary reason for the upgrade. The revised price objective is based on the Gordon-growth model and reflects a forward-looking price-to-book (P/B) ratio of 0.65 times for the fiscal year 2025 estimates. This target is positioned one standard deviation above the bank’s five-year mean P/B, taking into account the bank’s projected higher return on equity (ROE) trajectory.
The upgrade comes with an optimistic view on the bank’s financial performance. BofA Securities has increased its profit estimates for Security Bank for fiscal years 2025 and 2026 by an average of 13%. The firm anticipates that the bank’s profits will grow by 23% in fiscal year 2024 and by an even more substantial 38% in fiscal year 2025. These projections are based on expectations of robust credit growth and a net interest margin (NIM) uplift following rate cuts.
The firm’s outlook for Security Bank is more bullish than the consensus, suggesting that other analysts and investors may soon follow suit with upward revisions. The analyst’s expectations for fiscal years 2025 and 2026 are notably above the current market consensus, indicating a belief that the market has yet to fully recognize the bank’s growth potential.
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