"It is a sector riddled with risk, experts have been saying for months -- even years -- by way of explaining what is happening in the banking industry. Views about the concept of investment have not changed, but for the first time in a long time, some analysis firms are revising their profit estimations for four of the six largest banks listed on the Spanish stock market. The wave of cut earnings expectations has slammed market consensus views for Santander, Sabadell, BBVA and Popular.
Financial reforms going on in Spain are exacerbating the situation for banks, yet changes to the banks? lay of the land does not explain why views continue to deteriorate.
Now that it is practically impossible to issue new shares in order to deal with the CAM purchase, according to market sources, Sabadell is one of the stocks where shoots of new growth can be seen. For Sabadell, it could be said that trends are changing. More than 60% of investment analyst revisions for the bank?s annual Earnings Per Share (EPS) are bullish, while only four months ago only one in twenty-five experts expected Sabadell?s EPS to rise for 2012.
Some investment banks view the Sabadell deal in a positive light. Just yesterday shares of the bank rose 7.38% after spiking by as much as 16% earlier in the day. The firm N+1 launched a report that praised the positive synergies resulting from Sabadell?s acquisition and gave their "strong buy" recommendation for the stock. N+1 increased its EPS prediction for 2013-2014 by 25% thanks to the CAM purchase.
