IBERIAN DAILY 16 SEPTEMBER (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: GRIFOLS, IAG, NATURGY.

Stock markets rallied last week
Stock markets ended with gains on both sides of the Atlantic last week, recovering part of the latest corrections and trying to return to the highs hit thanks to cyclical and growth sectors. The Ibex35 led gains last week, hitting new annual highs above 11,500 points. Thus, in the STOXX 600 most sectors closed with gains, led by Technology and Retail, with Autos and Consumer Goods being the only sectors ending in negative territory. On the macro side, in the euro zone, July’s industrial output fell less than expected. In France, the PM M. Barnier outlined that he will form government this week. In Italy, the government would be studying the possibility of implementing new extraordinary taxes to the banking and insurance sector to finance the deficit. In the US, August’s import prices fell more than expected and the University of Michigan consumer confidence rose above expectations in September. On another note, D. Trump suffered a new assassination attempt on his Florida golf course. In China, the growth pace of industrial output, retail sales and investments in fixed assets moderated more than expected in August whereas the slowdown pace of home prices remained unchanged.
What we expect for today
Stock markets would open with gains >+0.2% and with value faring better. Currently, S&P futures are flat (the S&P 500 ended down -0.13% vs. the European closing bell). Asian markets are closed.
Today in the euro zone we will learn July’s trade balance and the 2Q labour costs and in the US September’s Empire manufacturing index.


COMPANY NEWS

IAG. New M&A options. We raise our T.P. up to € 3.00/sh. OVERWEIGHT.
After the Air Europa (AE) deal fell through, in the short-term we see TAP Portugal, where the company has already shown interest. We believe that this option makes strategic sense thanks mainly to its positioning in LatAm (with a ~7% market share; with less overlapping vs. AE), and because it also strengthens the sector concentration, generating synergies (between € 250-600 M BS(e)). The success of this deal will depend on the financial conditions that should mean the total privatisation of 100% of the company, and we believe it could mean a price range of between € 1.0-2.5 Bn. IAG’s business continues to prosper, and we keep our estimates unchanged and extend the rollover through 2025, raising our T.P. to € 3.00/sh. (+15% vs. previous T.P.), maintaining our OVERWEIGHT recommendation (+27% upside).