EUR 100.00 For Business Accounts Only

IBERIAN DAILY 12 JUNE (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ANNUAL SPANISH MARKET UPDATE, FERROVIAL, IAG.


Caution ahead of the Fed meeting
Stock exchanges saw profit taking at both sides of the Atlantic ahead of the US inflation data and the Fed meeting although with Europe still hit by the European elections result. In the STOXX 600, all sectors ended in negative territory, with Chemicals and Household being the best performers, whereas Banks and Basic Resources saw the biggest drops. On the macro side, in the UK, the job market showed exhaustion signs, with April’s ILO unemployment rate climbing unexpectedly, whereas wage gains provided a positive surprise after remaining at 5.9% YoY. In the euro zone, the ECB chief economist, P. Lane, considers that the inflationary pressures continue to be strong enough to maintain a restrictive monetary policy. On another note, the EU announced that it will impose additional 25% tariffs on Chinese electric vehicles. In Spain, the BoS raised its GDP’24 forecast to 2.4% from 1.9% previously. In France, Éric Ciotti, leader of the conservative party bet on an alliance with LePen party (RN). In the US, the SMEs confidence index (NFIB) improved much more than expected in May. In Mexico, April’s industrial output rose more than expected. In Brazil, May’s inflation climbed above expectations. In China, May’s inflation remained at the previous 0.3% YoY, whereas the drop in production prices moderated
What we expect for today
Stock markets would open with gains of up to +0.5%, although the US inflation data could halt the rises. Currently, S&P futures are up +0.07% (the S&P 500 ended up +0.54% vs. the European closing bell). Asian stock markets are sliding (China’s CSI 300 -0.15%, Japan’s Nikkei -0.58%).
Today in Germany we will learn May’s final inflation, in the UK April’s industrial output, in the US May’s inflation and the Fed meeting.

COMPANY NEWS

ANNUAL SPANISH MARKET UPDATE
Today 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). On the macro side in Spain we foresee robust GDP data in 2024-25 of 2.4%/2%, with upward risk in terms of inflation, which will extend the debate about interest rates. We believe that this environment will continue to benefit cyclical/growth vs. defensive stocks, where we place specific bets on penalised sectors/stocks (Utilities/Renewables). We analyse the debt situation of our coverage universe, as we estimate that around 30% of the debt issued will mature in 2024-26, mainly in Real Estate, Utilities and Renewables. We do not see risks in this regard but opportunities (Colonial, Redeia, Solaria), as the financial doubts have led to interesting opportunities. We currently cover 54 stocks, for which we have an OVERWEIGHT recommendation for 89% and UNDERWEIGHT for 11%. In this report we resume the coverage of Indra with an OVERWEIGHT recommendation, we raise that of Redeia to Overweight, downgrad that of Bankinter, Unicaja, Fluidra and Vidrala to Underweight. Our changes to T.P. (+5% on average in our coverage universe) have a more positive slant, with upgrades of more than +10% in fifteen stocks (LAR, Mapfre, Meliá, Ence, Rovi, Neinor, Merlin, CAF, Aedas, Metrovacesa, Aena, redeia, Cie and Caixabank) and significant cuts in only five (Acciona, Acciona Energía, Grifols, OHLA and Solaria). Our Top-Down valuation of the IBEX as of Dec’24 is 12,200 points (+8% upside), whereas from a Bottom-Up perspective our T.P. for the IBEX for a 12-month horizon stands at 12,983 (+13% upside), with an increase in aggregate EPS’23/25e of +6.3%.