Popular (BPOP) Gets A Barclays Lift, Is It Still 19% Undervalued?

Popular (NasdaqGS:BPOP) is back in focus after Barclays reaffirmed its positive stance on the banking group and lifted its expectations for where the shares could trade. The move follows a strong year-to-date performance relative to the broader market.

Popular’s latest move has come after a strong run, with a year-to-date share price return of 26.1% and a 1-year total shareholder return of 27.9%. Momentum has cooled over the past month, with the share price down 7.3%. Even so, the 3-year total shareholder return of 168.1% and 5-year total shareholder return of 126.0% still point to a stock where sentiment has shifted materially over time as investors reassess both growth potential and risk around the banking group.

Surf 27 high quality undervalued stocks that, like Popular, have recently caught analysts' attention yet still trade at a discount to their assessed worth.

That mix of long-run strength and a recent pullback raises a sharper issue for Popular. Is this a reset in sentiment, or is a gap between price and underlying business value starting to open up again?

Most Popular Narrative: 19.3% Undervalued

Popular’s most followed narrative pegs fair value at $196.70, comfortably above the last close of $158.82, which points to a meaningful valuation gap that analysts link directly to earnings power, fee growth and capital deployment.

The capital-rich balance sheet, with CET1 around 16.1% and a higher through the cycle ROTCE objective of 14% to 17%, gives Popular scope to continue buybacks and higher dividends under its US$1b authorization, which can lift per share earnings and support return on equity metrics.

See why 8 investors see Popular as 19% undervalued.

Result: Fair Value of $196.70 (UNDERVALUED)

Still, Popular’s heavy reliance on Puerto Rico, along with the potential for lumpier credit costs from single large borrowers, could quickly challenge that upbeat narrative.

Find out about the key risks to this Popular narrative.

Next Steps

Mixed about the tone of this Popular story and whether the risk or reward side really dominates right now? Move quickly, review the full breakdown, and weigh both the upside and the caution flags in the 6 key rewards and 1 important warning sign.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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