Italian investment bank Mediobanca Banca di Credito Finanziario S.p.A. is currently trading below the average share price that insiders reportedly sold €3.0M worth of shares for. Over the course of 2021, Mediobanca insiders sold a portion of their shares for an average of €9.65. As of the last week of March, MB was trading at €9.07. Historically, the European investment banking boutique has been a fairly stable investment, and so far this year, it is down just over 11%, leading many to consider obtaining stock or increasing their share. Let’s take a closer look at whether Mediobanca is a deal or no deal
Mediobanca Banca Di Credito Fzr SpA – A Promising Year Ahead
Over the last three years, Mediobanca has grown its revenue by 4.0% year-on-year, but the earnings per share haven’t changed for three years either. Investors have also criticised MB shares for offering inconsistent dividends swinging anywhere between €0.24 one quarter to €0.60 another. While definitely not a dividend-paying stock, the fact that shares are trading for lower than insider prices is a reason for closer investigation. Another motivating factor for potential investment is just how well the company is doing this year. Mediobanca reported excellent second-quarter 2022 results. Both revenue and EPS exceeded analyst estimates. Revenue was up 14% as opposed to the same period of 2021, whereas the EPS was up to €0.30 from €0.24 last year. Furthermore, MB shares average an 8% year-on-year increase making the current price hovering around €9 a good buy, if not quite as low as the €7.65 seen on March 7th, 2022.
Mediobanco Investment Concerns
Bearish investors worry over the Italian bank’s exposure to Russia. After all, Mediobanca does have among the largest involvement with Russian markets. So far, the largest extent of the damage was felt at the beginning of March after Western countries imposed sanctions to bar Russian banks from the SWIFT international payment system. UniCredit, the Italian entity with the greatest exposure, dropped 10%, but Mediobanca only came down 1.51%, showing just how well the company has handled the transition. Even the Italian Government itself was initially against expelling Russia from SWIFT due to the way that it would make Russian gas import payments amongst many things difficult, but it seems that Mediobanca, at least, is managing its international financial transactions and share growth well.
2022’s Growth Prospects
The year ahead is filled with potentially favourable developments for Mediobanca. Already, Mediobanca Private Banking has launched the Mediobanca Venture Capital Fund for Italian clients. Launched as a sub-division fund of Russell Investments Alternative Investments ICAV, the fund seeks to invest in high-growth tech companies in their start-up phase. The company will diversify to various other growth stages and aims to position itself as a leader in alternative investment solutions. Additionally, Fitch Ratings recently upgraded Mediobanca’s credit rating to BBB/Stable, which is a fantastic sign of stability over both a short and medium-term.
Attainably High Targets For MB Shares
Unless market sentiment becomes significantly disturbed to one of worry and risk by events such as the possibility of Mediobanca not seeing its candidate Philippe Donnet being appointed CEO of lead-investment Generali for the third year at its shareholder vote on April 29th, stock is on target to meet or exceed estimates. Leading industry analysts have set an average price target of €11.91 for Mediobanca International stock. The all-around forecasts make the current entry point a keen consideration, with the low falling at €11.11 and the high at €12.80, both granting good room for growth this year. We consider Mediobanca to be a ‘Buy’ for those investing over a mid to long-term period of up to a year or more.
Note: Please do not invest money or assets in the financial markets that you cannot afford to lose. This article should not be construed to be investment advice and is for information purposes only