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ANNUAL SPANISH MARKET REPORT JUNE 2021 (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). Throughout 2021, we have reduced our preference for cyclical and value stocks and now hold a neutral view on cyclical & defensive stocks and value & growth stocks, being more selective with the stocks more closely linked to the cycle. In this report, we only change BBVA from BUY to SELL, due to the lack of drivers in the short-term and its low valuation. On the other hand, we raise the Target Prices of our coverage universe by +7% on average, where we highlight: Unicaja (+68%), Liberbank (+57%), IAG (+50%), Arcelor Mittal (+45%), Acerinox (+27%), Naturgy (+27%), Bankinter (+22%), Santander (+21%), BBVA (+15%), Inditex (+13%) and Merlin Properties (11%). Of all the stocks within our coverage universe (57 vs. 59 in our previous report), 75% have a BUY recommendation (vs. 72% previously) and 25% have a SELL recommendation (vs. 28% previously). Our Top Down valuation of the IBEX as of Dec’21 stands at 9,000 points (vs. 8,500 previously), with an implied P/E’21 of 18.4x vs. 17.4x at which the 12M forward is currently trading and 13.5x on average expected for 2010-30.