Barclays Capital analyst Joseph Wolf has downgraded Bank Leumi (TASE:LUMI) and Mizrahi Tefahot Bank (TASE:MZTF) to "Equal Weight" from "Overweight." However, he has kept the two banks' target prices - NIS 18 for Leumi and NIS 35 for Mizrahi Tefahot. Leumi's share fell 1.7% in afternoon trading to NIS 17.35, while Mizrahi Tefahot was down 2.3% to NIS 35.64.
In an equity research survey Barclays said "Leumi and Mizrahi Tefahot remain our preferred investments for investors looking for exposure to the Israeli banking sector, but we do not see sufficient upside to continue recommending adding to positions nor do we expect to see the banks outperform the market to the extent they did in 2009."
Barclays kept Bank Hapoalim (LSE: 80OA; TASE: POLI) at "Equal Weight" and Israel Discount Bank (TASE:DSCT) at "Under Weight" and kept their target prices unchanged at NIS 16 and NIS 8.50 respectively. Hapoalim was down 0.36% in afternoon trading to NIS 16.77, while Discount was down 0.55% to NIS 9.25.
Barclays said, "Having upgraded our price targets and multiples only a month ago, we do not have sufficient conviction ahead of what could be a challenging 2010 to raise our estimates or target multiples further. Specific challenges facing the banks in 2010 include conformance to Basel II and new provisioning standards and, in general, managing through an economy that is definitely improving but that still shows pockets of weakness. However, from an investment perspective, as 2010 begins we believe that investors need to shift attention from the nuanced recessionary fears of 2010 and back towards growth and sustainable ROE."
Published by Globes [online], Israel business news - www.globes-online.com - on January 11, 2010
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