JPMorgan Picks Credicorp to Gain in Peru on Economic GrowthEduardo Thomson and Christine Jenkins
Credicorp Ltd., owner of Peru’s largest bank, may gain 32 percent by the end of the year as the Andean nation’s economy grows, according to JPMorgan Chase & Co.
JPMorgan included Lima-based Credicorp, owner of Banco de Credito del Peru, in its list of top picks for the region after a 27 percent fall since April 1, saying economic growth will keep supporting earnings in the country’s banking industry, according to an e-mailed note to clients dated yesterday. Other picks included Colombian oil producer Pacific Rubiales Energy Corp. and lender Bancolombia SA.
“We like the long-term secular growth story for financial services penetration in Peru,” Saul Martinez, an analyst at JPMorgan, said in the note. “Credicorp will sustain healthy profitable levels, on average, in the coming years.”
JPMorgan maintained a year-end 2013 price target of $158 per share for Credicorp, according to the note. The stock rose 50 cents to $120 at 11:03 a.m. today in Lima.
Credicorp is trading at 11.4 times its estimated earnings for the current year, 15 percent below its average estimated price-to-earnings ratio of the last four years.
Peru’s gross domestic product will grow 5.75 percent in 2013 and 6 percent in 2014, the fastest of any major Latin American country after Panama, according to economists’ estimates compiled by Bloomberg.
JPMorgan forecasts 4.5 percent economic growth for Colombia in the second half of 2013, according to the report. In the first quarter, GDP in the country grew 2.8 percent from a year earlier.
“Pacific Rubiales is our pick in Colombia, as we remain positive on oil production,” analysts led by Diego Celedon and Pedro Martins Jr wrote in the report. Bancolombia was included as “expectations of stronger economic activity and lower rates should drive attractive loan growth,” the report said.
Colombia’s benchmark Colcap index has dropped 5.4 percent over the past month, compared with an 11 percent drop in the MSCI EM Latin America Index.
Expectations for an acceleration of growth in the second half of the year have helped shield Colombian stocks from a bigger drop, the report said.