ACS is left out of Bankinter’s favorites due to its stumble in the Middle East

  • Five of the six firms that have revised their advice for the construction company in the last fortnight have lowered it
  • Bankinter analysts have preferred to cede to Indra the outstanding position that they granted to the company

The bill that your recent stumble in the middle east is transferring to ACS goes beyond the latest setbacks in the stock market. Several analysts and managers have moderated their perspectives on the construction company and some they have already removed it from their list of favorite values. At Bankinter, it is no longer part of its ten favorite Spanish listed companies.

The analysts of Bankinter have proceeded to expulsion of ACS from its club of 10 favorites “for the losses in its Australian subsidiary”, as a result of the withdrawal of its activity in the Middle East. This is how the experts from the orange bank explain it in their latest review of model portfolios that has just come to light and in which they replace the construction company with the technology company Indra.

Although from the financial entity that María Dolores Dancausa commands they consider that “the punishment to which the ACS price has been subjected has been excessive”, They also point out that the “strong provisions” that it has announced that it will have to face are reason enough to loosen the bet. So much so that, in the entity’s expanded portfolio, which is made up of positions in its 20 favorite Spanish listed companies, the weight given to the construction company has dropped from six to only two points from one month to another.

“The punishment to which the ACS price has been subjected has been excessive, but the construction company has announced strong provisions”

A situation inversely proportional to the one that analysts have drawn for Indra, which enters the portfolio of 10 positions and triples his weight -from two to six points- in the 20. A fattening bet that is based on some quarterly results “better than expected” that have allowed the company to confirm its forecasts for the end of the year and leave an open door for “the share to show its potential”.

With this change, Bankinter’s 10 favorite portfolio is made up of Ferrovial, Inditex, Acciona, Acerinox, Cellnex, Iberdrola, Aena, Enagas, Amadeus and Indra herself.

The only additional change to the replacement of ACS has been produced by the delivery of one weight point of the nine that the bank had been granting Acerinox to Enagás. While the steel remains exposed to the ups and downs of international trade, the second seems to have a clearer path now that the National Commission of Markets and Competition (CNMC) has laid the foundations for the definitive remuneration for the gas industry.

A 4.5% LOWER CEILING

However, back with the construction company chaired by Florentino Pérez, Bankinter’s ostracism is not the only one to which the company has been condemned in recent sessions. Just in the two weeks since he announced his financial doldrums in the Middle East, its target price has fallen by 4.5%. From 42.10 euros per title on June 22 to 40.22 euros that the consensus of analysts marks today, according to data compiled by Refinitiv.

Throughout this last fortnight, only the analysts of the Santander have been more favorable than they were previously with respect to the construction company, with a recommendation to buy and a target price of 45.2 euros per share, which implies a 32% upside potential that places the analysts of the bank chaired by Ana Botín among the most friendly in the market towards value.

This criterion, contrary to the other five firms that have revised their position towards the construction company in recent days, is very different from that shown by other experts who this week have worsened their advice on underweight and reduced its target price to 30 euros per title, a level whose achievement would imply a fall of 1.5% from its current price and put in serious trouble one of the clearest support areas of the stock.

While waiting for ACS to publish its annual accounts on February 18 at the close of the stock market, what is known is that its Australian subsidiary Cimic has incurred red numbers at the end of 2019 precisely due to the deterioration of 800 Australian dollars -about 490 million euros at foreign exchange- associated with the unexpected sale of its business in the Middle East.