Nigerian banks have taken center stage in late-September equity recommendations, with several banks receiving multiple positive ratings from brokerage reports. A review of six brokerage reports revealed that UBA, Access Holdings, ETI, FCMB, GTCO, and Zenith Bank each received at least four positive ratings. This strong showing by the banking sector comes as the Nigerian Exchange (NGX) continues its record-breaking run. Analysts have identified further opportunities despite concerns over elevated valuations and differences in stock-price targets.
The NGX All-Share Index rose 2.78 per cent in the week ended September 18 to 249,804.56 points, taking its year-to-date gain to 60.53 per cent. On Monday, the index advanced another 0.14 per cent to close at a record 250,156.80 points, while market capitalisation climbed to N162.39 trillion. The review covered recommendations from six brokerage firms, including Cowry Asset Management, Morgan Capital, and Blue Marina Research.
UBA attracted four positive ratings from Cowry, Blue Marina, First Securities, and Futureview, with targets ranging from N50.13 to N66.07 and an average of N59.31. Access Holdings also secured four Buy ratings, with an average target of N42.78 against a reference price of N29.15. ETI received four positive recommendations, although its target range of N107.63 to N296.02 illustrates the wide divergence among analysts.
FCMB joined the strongest banking consensus with four Buy ratings, while GTCO and Zenith Bank also received four positive recommendations each. However, not all analysts share the same bullish outlook. Arthur Steven Asset Management issued Sell ratings on both GTCO and Zenith, highlighting the significant differences in valuation assumptions among brokers.
Market analysts caution that investors should be cautious about interpreting average target prices in isolation, particularly where individual forecasts are unusually high or low. An equities analyst, Shina Okeleji, noted that the divergence reflects differences in earnings projections, interest-rate assumptions, asset quality expectations, and valuation methodologies.
Okeleji advised investors to look at the underlying earnings outlook and valuation multiples rather than simply choosing the stock with the highest implied upside. Another market expert noted that the banking sector remains central to the market because stronger earnings, dividend prospects, and expectations surrounding monetary conditions continue to shape investor interest.
The dominance of banks in the stock market is expected to continue, driven by their strong earnings and dividend prospects. However, investors are advised to exercise caution and conduct thorough research before making investment decisions. The NGX's record-breaking run is expected to continue, but investors must be aware of the potential risks and challenges facing the market.
Key points
- Nigerian banks dominate late-September equity recommendations
- NGX continues its record-breaking run
- Analysts caution investors to be aware of differences in valuation assumptions
