Leading US broker JP Morgan has raised its rating for Bank of Ireland to 'buy' from 'market performer', setting a fair value of euro 11.00 per share.
JP Morgan is also understood to have added Bank of Ireland to its 'Top 5' overweight picks in the European banks sector.
The broker reportedly estimates that Bank of Ireland is one of the cheaper retail banks in Europe, with the shares currently offering 18 per cent potential upside to its fair value, making the shares, in its view, among the few significantly undervalued retail banks in Europe.
JP Morgan is understood to believe that Bank of Ireland gives investors excellent long term growth prospects through exposure to the Irish economy, and a relatively defensive loan portfolio - of which 45 per cent is in British mortgages.
The broker also reportedly noted that Bank of Ireland used last month's trading update to lower EPS guidance for the half-year period to September 30th from "high single-figure growth" to flat EPS half-year on half-year due entirely to the impact of lower equity markets on embedded values in the group's life businesses.
However, following a post-trading update meeting with the company, JP Morgan is understood to have not changed its EPS estimates for Bank of Ireland of 86 cents for the year to March 2002, and of 92 cents for the year to March 2003.
AFP