The following excerpts explain why Zacks senior banking sector analyst Ann H. Heffron, CFA rates a Hold on ABN AMRO Holding N.V. (ABN) until the largest takeover in the history of financial sector is completed:
'We are continuing our Hold on ABN AMRO Holding N.V., but raising our target price to $54. On October 5, 2007, the RBS consortium, Spain's Banco Santander Central Hispano S.A. (STD), and the Dutch-Belgian bank Fortis, N.V. announced it had acquired 86% of outstanding ABN shares, and on October 10, announced the offer was unconditional, with the settlement of offers to occur on October 17.
'Following this, ABN CEO Rijkman Groenink tendered his resignation, and Mark Fisher, a member of the RBS Group Board and Group Executive Management Committee, was nominated as his replacement. On October 1, 2007, ABN AMRO completed the $21 billion sale of LaSalle to Bank of America (BAC). ABN is expected to report third quarter earnings on November 1, 2007.
'At its current price, ABN is trading at 17.5X the 2008 consensus earnings estimate, a 46% premium (versus a 23% premium in our last report on July 31, 2007) to the industry median of 12.0X, based on 2008 consensus estimates. Our target price of $54 (roughly equivalent to the offer prices from the RBS consortium) represents about an 18 ½X P/E multiple of estimated 2008 earnings of $2.94 per ADS (excluding LaSalle).'
Read the full analyst report on ABN.
Read the full analyst report on STD.
Get real-time market insights and profitable stock recommendations from the team of analysts at Zacks Equity Research. See all todays Analyst Blog entries on Zacks.com.