EUR 100.00 For Business Accounts Only

IBERIAN DAILY 08 MARCH (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ELECTRICITY SECTOR, INDITEX, MAPFRE, REPSOL, TELECOMS SECTOR.

Very high volatility
The European stock markets managed to recover from the strong corrections seen at the opening bell in a session of maximum tension due to energy prices. The threat of a veto on the purchase of oil from Russia caused strong volatility on the European stock markets, with the Ibex falling by more than -5.5%. Thus, the Euro STOXX managed to close down by “only” -1.2% in a session in which Energy and Technology were the only sectors that did not post losses vs. the worse relative performance of Banks and Insurance. On the macro side, in the Euro zone, March’s Sentix confidence index returned to negative territory for the first time in a year. The EU will present tomorrow its proposal to reduce the energy dependence on Russia.
What we expect for today
The European stock markets would open with drops of around -1.0% in view of Russia’s threat to cut the gas supply to Europe via the Nordstream I pipeline, whereas Germany does not think it is possible at present to cut its energy dependence on Russia. Currently, S&P futures are down -0.6% (yesterday the S&P 500 ended -1.08% lower vs. the European closing bell). Volatility in the US rose (VIX 36.45). Asian markets are falling (China’s CSI 300 -0.5%, and Japan’s Nikkei -1.7%).
Today we will learn in the Euro zone the final 4Q’21 GDP, and in Spain January’s industrial output. In debt auctions: Netherlands (€ 2.5 Bn in bonds due 2029) and Germany (€ 750 M in I/L bonds due 2030 and 2033).

COMPANY NEWS

INDITEX. Results Preview and change of recommendation to BUY.
We change our recommendation from SELL to BUY following the stock’s poor performance since the year started (-30%) and despite reducing our T.P. by -10% (and EBIT’22e by -19%) to € 28.88/sh. (+45% upside) to reflect the negative impact form the Russia-Ukraine war conflict, which has forced the company to close its stores in these countries. We will also comment on our forecast for the 4Q’21 results, which the company will release on 16 March and which we expect to show a positive tone thanks to a good start to the quarter and an undemanding comparable basis. We believe this is a good time to invest in the stock, which is trading at a P/E’22e of 20x (vs. historical average of 20x-30x), close to post-Covid lows.