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A correction was definitely overdue for both AIB and BIRG given the rapid acceleration of their share prices over the past few weeks. The volumes of shares traded in the last few days has not been unusually high so I'm not reading anything significant into the price movement.
I agree, €10 is a reasonable target price. It's difficult to compare the Irish banks with either the euro area or UK banks as the dynamics in the Irish market are somewhat unusual. The higher targets are mainly from the Irish brokers, especially Davy. Reading their analysis it's hard to dispute that BIRG deserves a premium valuation but I will be happy enough to take some money off the table @ €10.
Very impressive performances from both BIRG and AIB over the last few months - AIB had been lagging BIRG for a while but it has really accelerated over the past six months (+92%). I own both stocks but decided to reduce my AIB holding by 50% on Friday - who knows, it may keep going up but it's close to NAV and the government are selling so there will probably be some pullback in the price. I consider BIRG as a hold at present - let's see how things stand in March.
Absolutely agree - too many punters (as opposed to investors) think they can play the unpredictable daily movements on stocks. If a company has sound fundamentals and is undervalued it will always come good in the long run. Anyone who bought into BIRG at less than the NAV i.e. anytime over the last few years just had to sit back and wait for it to get re-rated to a more sensible valuation. The long game always pays off when the fundamentals are good.
Ignore the day to day noise around the BIRG share price. BIRG is a small component within the Euro banking sector so It gets tossed around a bit due to buying and selling of the various Euro bank index funds and ETFs. From a fundamentals point of view BIRG is solid and in the current interest rate environment it will be very profitable over the next few years. As the saying goes - in the long run the stock market is a weighing machine.
Seemed to breeze through €8 with very little resistance this morning. It's getting closer to NAV now so it may pull back a bit but it's probably still reasonably valued. Upside from this point will depend to a large extent on the premium that investors are willing to pay for the BIRG growth story.
I agree that Blackrock are ruthless and they have shown this time and time again. However, they have been buying and selling tranches of BIRG all the way up from €1.40 but still increasing their overall stake. While they will probably continue to roll over some of their earlier purchases at big profits it's unlikely they are buying such large volumes in the high €7's in order to dump them at €8. They will be looking for bigger gains on these buys.
Higher trading volumes combined with price rises is always a good sign. I would not be surprised to see some of the larger European banks taking positions in BIRG to get a slice of one of the few banking growth markets.
The ECB changed the interest rates on targeted long term refinancing loans so the Irish banks won't keep the sweet deal they had of getting a higher interest rate on their deposits with the ECB versus the lower borrowing rate. It's not hugely significant but it will erase some easy profits they were making.