Top Performer: Fidelity Bank Sees 23% Valuation Surge
Fidelity Bank Plc benefited from a fresh rally on the Nigerian Exchange, led the gainers chart over a five day rally. The bank’s share price rose sharply, up by 23% week on week as value hunters and shareholders queued behind the financial services stock.
In an attempt to diversify its revenue streams, the bank, which is currently undergoing recapitalization, is looking to increase its footprints across African markets. With a rather optimistic management team that keeps their eyes on taking Fidelity Bank to Tier-1, its earnings performance came strong in the first quarter of the year.
With acquisition of Union Bank UK, and planned business expansion, Fidelity Bank has continue to see geographical diversification to reduce earnings volatility. Management would be required to raise N370 billion in capital to keep international authorisation.
The plan is in top gear to raise funds through public offer, right issues and may be private placements, according to analysts. In the first quarter of 2024, the bank grew pretax profit by 132% year on year to N124.3 billion.
The earnings beat drawn investors to the tier-2 lender. Its share has been less volatile reducing the risk of investment loss. Last week, Fidelity Bank led the gainer chart in the banking segment due to solid buying interest in its stock. The weekly popularity took the price above N10 amidst a plan to raise capital to meet the recapitalization deadline.
Its market valuation increased by 22.89% in five trading sessions to N326.524 billion. According to data from the Nigerian Exchange, Fidelity Bank surged to N10.2 on Friday from N8.30 per share at the beginning of the week. The bank stock price had peaked at N14.4, its 52-week high, details from the exchange showed. At the current rate, Fidelity Bank is trading more than 29% below its 52 week high.
The stock had bled due to the latest poorly-received earnings reports and investors’ mood swings in the local bourse. Apel Asset Limited estimated that Fidelity Bank Plc shares would rise by roughly 35% at the N9.00 reference price when making its stock recommendation.
The investment firm said a close look at banking sector stocks indicates that a number of them are trading close to their support prices. Support prices are the prices at which a stock is expected to attract significant interest from investors, thereby stimulating buy orders for the stock.
A review of industry reports showed that some investment firms raised the bank’s 12-month price target following earnings beat in financial year 2023, which was further consolidated in the first quarter of the year. #Top Performer: Fidelity Bank Sees 23% Valuation Surge Reforms: Fitch Revises Nigeria’s Outlook to Positive
