Reiterating her bullish case for Allied Irish Banks (AIB), Zacks senior banking industry analyst Ann H. Heffron, CFA explains why the future looks bright for the European banking company:
'We are maintaining our Buy on Allied Irish Banks, Plc, as well as our $60 price target as we consider the stock attractive at its current price. In its third quarter trading update, AIB affirmed its prior earnings guidance of a 13% increase in per share results, based upon strong loan growth and improved productivity. The company also disclosed that its US sub-prime exposure was modest at $500 million.
'We are increasing our diluted EPADS estimates to $5.62 from $5.50 for 2007 and to $6.23 from $6.10 for 2008, solely due to US$ depreciation against the euro. AIB's results should benefit from strong loan growth offset, in part, by increasing loan loss provisions and declining net interest margins due to slow deposit growth and increased competition. AIB posted first half adjusted net earnings of 951 million, up 17% year-over-year.
'At it current price, AIB is trading at 7.8X the 2007 estimate and 7.1X the 2008 estimate, based upon consensus estimates for 2007 and 2008, respectively. These are well below the median P/E ratios for the industry, also based on consensus estimates. AIB's growth prospects, estimated at 12% over the next few years, are higher than the industry's 11%, as is its dividend yield. Our target price of $60 represents about a 9 ½X P/E based on our 2008 estimate of $6.23 per share.'
Read the full analyst report on AIB.
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