Grupo Supervielle S.A. (NYSE: SUPV) is a holding company with a long-standing presence in the Argentine financial system and a competitive leadership position in certain attractive market segments.
The Company’ shares are listed in BYMA and NYSE since May 2016. Grupo Supervielle has developed a multi-brand business model to differentiate financial products and services offered to a broad spectrum of individuals, small and medium-sized enterprises and large companies in Argentina. To date, it is made up of Banco Supervielle, Cordial Compañía Financiera, Tarjeta Automática, Supervielle Seguros, Espacio Cordial de Servicios, Supervielle Asset Management, Mila, Invertir Online and Sofital.
On August 23rd, the company reported results for the three and six-month periods ended June 30, 2018. As per management, the company’s macro assumptions for the year included stable foreign exchange, declining interest rates, and decelerating inflation; the macro backdrop changed suddenly in the quarter resulting in a sharp currency devaluation, interest rate hikes and higher inflation that led to results below management’ expectations.
In this context, the company took various decisive actions. First, it further tightened credit standards throughout the Company. Second, it is implementing cost-cutting measures. Third, the company decided to streamline and change the management of its consumer finance operations. Effective August 24, 2018, the consumer finance units of Grupo Supervielle, which include: Cordial Compañía Financiera S.A., Espacio Cordial de Servicios S.A., Tarjeta Automática S.A., and the recently acquired car lending business Micro Lending S.A., will be led by Mr. Juan Martin Monteverdi, current CEO of Espacio Cordial de Servicios S.A. By combining the four companies under a unified leadership, SUPV seeks to drive increased operational efficiency, accelerate the offering of a wide range of consumer products, enhance customer experience, and increase cross-selling. Fourth, based on the repricing dynamics of its portfolio, its banking business is anticipated to capture increased interest revenue from rate hikes.
However, management believes this will be insufficient to offset the weak results in the second quarter of the year, and the impact of higher cost of funds and lower loan growth in consumer finance. As a result, the company revised its guidance for the year. It said the management is convinced of the resilience and strength of its franchise as well as its policies and practices and believe the long-term growth potential for the financial sector in Argentina remains unchanged.
Analysts tracking the stock believes that the company has a very strong regional franchise and therefore notwithstanding the near-term challenges faced by the company, its core fundamentals, and business remains healthy with active quality in SMEs and middle market and is at historically low levels. Deposits performed well and continued to expand exceeding the growth of its loan book. Also, the market remains optimistic regarding the long-term prospects for Argentina and its industry.
As per www.marketbeat.com, the average twelve-month price target is $14.3333, suggesting that the stock has a possible upside of 82.82%. The high price target for SUPV is $26.00, and the low-price target for SUPV is $8.00. There is currently one sell rating, two hold ratings and one buy rating for the stock, resulting in a consensus rating of “Hold.”
Excerpts of the recent analyst rating and price target on the company:
About the company and business overview: Grupo Supervielle is a fast-growing financial services company in Argentina, with 3 billion dollars in assets, more than 2 million clients and an overall loan market share of 5.1% of the Argentine Private Financial market.
The company offers diverse financial products and services that are specifically tailored to cover the different needs of its customers through a multi-brand and multi-channel platform. Over the years, SUPV has developed a multi-brand business model to differentiate the financial products and services it offers to a wide spectrum of individuals, small and medium-sized enterprises (“SMEs”) and medium to large-sized companies in Argentina
Business segments: The company delivers tailored value propositions in each of the key business segments in which it operates.
Argentina’ macro perspective:
Second quarter 2018 highlights:
Key risk factors:
- Limited visibility of turnaround over the near term.
- Company’ ability to contain deterioration in asset quality and financial performance is critical and remains a crucial stock sensitivity factor over the near to medium term.
- A material deterioration in the asset quality, less-than-budgeted financial performance or a sizeable loss of franchise could lead to negative investor sentiments.
- Improvement in macro factors and Argentina Country Risk would remain a significant and long-term positive trigger for the company and overall industry as well.
- On Friday, September 7th, 2018, SUPV closed at $7.84, on an average volume of 1.7 million shares exchanging hands. Market capitalization is $881.859 million. Current RSI is 43.35
- In the past 52 weeks, shares of SUPV have traded as low as $4.91 and as high as $33.85
- At $7.84, shares of SUPV are trading below its 50-day moving average (MA) at $10.63 and below its 200 days moving average at $22.59
- The present support and resistance levels for the stock are at $7.12 & $8.76 respectively.
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