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ANNUAL SPANISH MARKET REPORT JUNE 2020 (ANÁLISIS BANCO SABADELL)

We are releasing our report on the Spanish market, in which we review our estimates and T.P. for all the stocks in our coverage universe and we highlight the top picks of our portfolios (model, 5-stock, high yield and Mid&Small cap). We change Bankia to BUY, and NH, Euskaltel and Iberpapel to SELL. We cut our T.P. for our companies in our coverage universe by -18% on average, with the most relevant changes being the following: Prisa (-59%), IAG (-56%), Bankinter (-55%), Liberbank (-53%), Unicaja (-49%), NH (-43%), Aedas (-42%), Bankia (-41%), Metrovacesa (-39%), Lar (-38%), Arcelor (-38%) and BBVA (-37%). Of all the stocks in our coverage universe (59 vs. 65 in our previous report), 72% have a BUY recommendation (vs. 55% previously) and 28% have a SELL recommendation (vs. 45% previously). Our Top Down valuation for the Ibex 35 for Dec’20 stands at 7,780 points (vs. 9,885 pre Covid-19), with an implicit P/E ratio for Dec’20 of 16.3x vs. 18.9x at which the 12M forward is currently trading and 13.5x on average expected for 2010-30. From a Bottom Up perspective, we value the IBEX 35 at 8,501 points over a 12-month period (+12.4% upside vs. 10,782 previously).