Banks, Oil & Gas Stocks: Buy, Hold or Sell

Banks, Oil & Gas Stocks: Buy, Hold or Sell

Several equities analysts have been adjusting their estimates as order books continue to be filled. Guess what, Nigerian investors are building wealth in the stock market now, Nigerian Exchange remains on top of the list of best-performing bourses globally.

For us, two things have been driving the recent moment. First, pro-market speech by Nigeria’s new president, Bola Tinubu, and we observe a spike in market valuation of underpriced deposit money banks.

The All-share index crossed 60,000 points recently, trading at a 15-year high. That means this level was seen last in 2008. The positive thing is, according to stockbrokers, there will be a further uptrend as earning season effects comes to play.

The market direction will now depend on the sector where earnings momentum will peak. Mostly, investors are pushing for a large bet on banking shares – don’t say, MarketForces Africa didn’t tell you.

What about the oil and gas sector? Big names in the segment could see mixed reactions because of naira devaluation – which may affect their capital spending and existing obligation- most analysts think they could face challenges.

Their losses are gains to Nigerian banks on one side, but banks too could see increase provision due to higher exposure to the sector – plus pressures from foreign loans.

Overall, banking experts (If you have read our discussions with Toyin Sanni, Emerging Market Africa Group, Peter Amangbo, Globus Bank Chairman and ex-Zenith Bank CEO, Jibril Aku, Marathon Group Chairman, ex-Ecobank CEO and GCR Ratings team among others) believe local lenders will see a spike in revaluation gain.

The gain by these banks will reduce associated pressures while some banks are planning capital raise. Tier-2 banks will feature in the debt market for borrowings …taking credit in the eurobond market may be expensive.

Some lenders have ways to raise private placement: Fidelity Bank did, and Jaiz Bank’s single largest shareholder did the same when the Islamic lender hit an iceberg. Inside sources told MarketForces Africa that First Bank of Nigeria may visit the market to shore up its position and Fitch Ratings has already placed FCMB under the watch.

In its stock recommendation, Futureview Financial Service showed that several companies’ shares have mild or quite soft upside potential. At the same time, equities analysts at the investment firm guide investors on stocks with double-digit upside potential.

Guinness Nigeria, Lafarge WAPCO, and Nigerian Breweries have the highest upsides, according to Futureview analysts’ note. These earned the tickers’ analysts buy recommendations.

Analysts appear to have mixed feelings about banking stocks as none under its Futureview coverage universe made a buy recommendation. in short, Futuview would rather dump Access holdings and UBA shares.

Equities analysts at the investment firm were neutral on Zenith Bank, Fidelity, FCMB, and Guaranty Trust Holdings Plc because, over the next twelve (12) months, analysts expect the stock to range between 0% and 10% from the current market price.

How do analysts see the oil and gas tickers? Total and Seplat attracted hold recommendations amidst uncertainties about their earnings and the impacts of naira devaluations on their operations. > Naira Reclaims Value as Nigeria Mulls Eurobond Raise

There is a mixed expectations about telecom stock performance. MTN Nigeria has 21% upside potential, according to Futureview analysts and rated buy. However, Airtel Africa, a falling angel, has a 4% upside, thus kept in the hold rating bucket. #Banks, Oil & Gas Stocks: Buy, Hold or Sell