CardinalStone Sees Strong Upside in GTCO, Soft on Zenith Bank

CardinalStone Sees Strong Upside in GTCO, Soft on Zenith Bank

Multi-asset investment management firm, CardinalStone Partner Limited, has released estimates on Nigeria’s big banks after strong stock market re-rating that pushed their combined valuation above N3.5 trillium.

In an update, equities analysts at CardinalStone Securities see a strong upside in GTCO Plc than Zenith Bank Plc, the investment firm estimates on the banking stocks show. The two most profitable lenders are the banking industry benchmark for measuring performance.

GTCO and Zenith remain major contended in the banking sector in terms of earnings performance and their immediate rivalry spanned a donkey in the industry.

Analysts at CardinalStone estimated a 53.49% upside potential in GTCO Plc share, and less than of that in Zenith Bank. Meanwhile, MarketForces Africa reported that these two contenders just made a strategic entry into the trillion naira valuation club recently.

At a reference price of N32.3 kobo per share, CardinalStone analysts set the price target for GTCO at N49.58, translating to 53.49% upside potential for investors that own the bank stock.

On reference price of N32, equities analysts at the multi-assets investment banking firm expect Zenith Bank to lag behind its expected positive movement in GTCO. > Reclaims Value as Nigeria Mulls Eurobond Raise

In short, analysts set a price target for Zenith Bank at N39.47, translating to a 23.34% upside potential at a reference price of N32 per share. Though the bank’s profit performance has been on steady growth. However, its ‘key man risk’ has been a major discussion across Broadstreet.

Market sentiment seems to be positive for GTCO across Broadstreet due to its wide shareholding structure – that’s not found in its immediate rival. Instead of Zenith Bank, equities analysts would rather bet large on United Bank for Africa with 33.04% upside potential at a reference market price of N11.50.

CardinalStone sets N15.30 as the target price for UBA. The banking sector is expected to see positive impacts from revaluation gain after the naira was floated in June 2023. This is expected to boost their earnings, especially those with net foreign currency positions.

“Our analysis has shown that the Tier-1 banks are on course to book massive gains due to their long dollar position. These revaluation gains would boost the bottom line and partly offset any weakening of capital ratios due to FCY-weighted assets.

“In addition, the CBN has hinted that there could be an unwinding of the unorthodox CRR regime, and this would free up liquidity for the banks”, CardinalStone told investors in an update. #CardinalStone Sees Strong Upside in GTCO, Soft on Zenith Bank

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