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IBERIAN DAILY 23 JUNE (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: IBERDROLA, ROVI.

MARKETS YESTERDAY AND TODAY
Mixed performance of Europe, with the Ibex holding up above 9,000The European stock markets ended mixed (with core indices beating peripheral ones) after trading sideways during most of the session. Thus, within the Euro STOXX, almost all sectors ended in the black, with Chemicals (for the second consecutive day) and Travel & Leisure being the best relative performers vs. Autos and Utilities, which saw the biggest drops. On the macro side, in the Euro zone, June’s consumer confidence increases less than expected. In the US, second-hand home sales fell less than expected, whereas the Richmond Fed manufacturing index for June climbed above expectations. As for central banks, J. Powell, from the Fed, insisted in his speech before the Senate that rise in inflation is temporary, even if it has increased more than expected. Separately, A. Fauci (Director of the National Institute of Allergy and Infectious Diseases) warned that the delta strain could become dominant in 2-3 weeks in the US and is the main risk to eliminate Covid-19. In Japan, the manufacturing PMI contracted from 53 to 51.5, whereas the services PMI climbed from 45.7 to 47.2.What we expect for todayThe European stock markets would see a slightly bullish opening, with growth stocks performing better, in line with their performance in the US.
Currently, S&P futures are up +0.2% (the S&P 500 ended +0.25% higher vs. its price at the closing bell in Europe). Volatility in the US decreased (VIX 16.66). Asian markets are rising (China’s CSI +1% and Japan’s Nikkei +0.1%).
Today we will learn in the Euro zone and the United Kingdom June’s PMIs, and in the US May’s new home sales data. In debt auctions: Germany (€ 2.5 Bn in bonds due 2036).

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). 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.

ROVI. Accelerated bookbuild of 3% of the company. SELL
Norbel Inversiones, an investment fund run by the Lopez de Monte family, has sold 3% of its stake in the company (1.68 M shares) in an accelerated bookbuild announced after yesterday’s closing bell. The placement price was € 52.25/sh., with a -5% discount over the closing price. After the placement, Norbel Inversiones’s stake stands at 60.1%, and the company commits to holding the stake for the next 3 months. The sale is justified by the target of gaining liquidity in order to be included on the IBEX. Negative news, especially bearing in mind that the stock is at a record high (€~55/sh.).