In a report released on May 13, Tito Labarta from Goldman Sachs maintained a Hold rating on Bancolombia (CIB – Research Report), with a price target of $35.00.
Tito Labarta has given his Hold rating due to a combination of factors surrounding Bancolombia’s financial forecast and current market position. The institution’s recent guidance for 2024 suggests improved macroeconomic conditions in Colombia, which are expected to result in greater loan growth and potentially a more favorable cost of risk than previously anticipated. However, Labarta also notes that Bancolombia anticipates a less efficient ratio, stemming from reduced interest income linked to lower year-end rate expectations. Despite these mixed signals, management at Bancolombia remains optimistic about meeting its return on equity (ROE) goal of roughly 14% for the year 2024, with the possibility of achieving up to 15% contingent on the progression of asset quality.
Labarta’s analysis also factors in how the stock is currently valued relative to industry peers. Even though Bancolombia’s stock trades at a discount (0.8x 2024E price-to-book value (P/BV)), it is lower than Latin American (LatAm) peers, which average 1.6x. Additionally, the bank’s projected ROE of 14.4% for 2024 is modest in comparison to the average among its peer group. These valuation disparities, coupled with an unchanged net income projection for 2024 and an expected increase in the tax rate, contribute to the Neutral—or Hold—rating as it indicates the stock’s weaker earnings momentum may already be reflected in its current valuation.
In another report released on May 2, Bank of America Securities also initiated coverage with a Hold rating on the stock with a $38.00 price target.
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Bancolombia (CIB) Company Description:
Bancolombia SA provides various banking products and services to individual, corporate, and government customers in Colombia, Latin America, and the Caribbean region. It operates through following operating segments: Banking Colombia, Banking Panama, Banking El Salvador, Banking Guatemala, Trust, Investment banking, Brokerage, Off Shore and Others. The firm offers automobile, personal, and education loans, credit and debit cards, securities brokerage services, fund transfers, lease and foreign trade financing, insurance, and pension funds. The company was founded on January 24, 1945 and is headquartered in Medellín, Colombia.
