Sabadell Target Price Down for assuming higher cost of equity (11% vs. 10%)

Morgan Stanley’s Equity Analyst Alvaro Serrano raised his recommendation of Spanish Banco Sabadell (SAB) to Overweight (OW) in May with the expectation that NPA sales, improvement in TSB and a capital near 12% CET1 would improve the visibility of benefits from 2020. He has risen 40% since the summer lows and, while he is still hoping that they will meet NPA’s capital and sales goals, it seems less confident about TSB after last week’s investor day. Therefore, Serrano reduces SAB Target Price since the financial entity has assumed a higher cost of equity (11% vs. 10%).