The firm’s analysts revised their outlook on CIB to “outperform” from “underperform” with a new target price of $72.00. At recent levels, that represents potential upside of 21% for CIB shares.
Their improved view on CIB also stems from the bank’s upcoming capital injection and its “price performance relative to regional peers.”
“We expect Colombia’s system credit to expand 18-20% y/y in local currency in 2012E, becoming the fastest-growing banking sector in the region,” experts add.
The analysts are betting that CIB has sufficient resources to continue capturing growth opportunities without affecting its solvency ratios.
The potential risks they see are: a rich valuation, a slower-than-expected use of new capital and unproductive acquisitions.
Finally, as Raymond James notes, CIB’s shares are “trading at a 3% premium over other relevant Andean banks, which compares to an average premium of 10% in the last 12 months.”