FINANCIALS: BCP Results Due Tonight: Laterals Positive But M&A Spec A Key Driver

BCP (BCPPL: Baa2/BBB- pos) results are due at 1700 (London time). Takeover speculation, as Fosun sells industrial stakes, has been a key driver of price performance here but laterals from banking peers have been reasonably positive, too.

• Results last time (16-May) were broadly in line with consensus with solid credit metrics but the real story was the CEO’s comment about openness to consolidation, albeit on a long timeline. 
• Fosun (a 20% equity holder in BCP) is disposing of industrial stakes and both BBVA and Caixabank have been rumoured to be interested. The former appears unlikely (unless it fails in its bid for Sabadell) and the latter hasn’t acted yet, as far as we know. Recent results from Bankinter and Caixa imply positive things for Portuguese banking results.
• Spreads have done very well this year and have tightened another 15bp in the last month (€IG banks -3bp) so there’s a lot of expectation built into prices (equity similarly), in our view.
• Revenue estimates are up 1-2% since last results with earnings pushed 7-8% ahead, so the sell-side concurs with this view, it seems.

Results are due at 1700 (London time) with a conf call at 1500 on 1-Aug at: https://edge.media-server.com/mmc/p/c4h9eji8/