Morgan Stanley Reiterates on Popular, Sustained Improvement Expected

In a report published Monday, Stifel analyst Ken Zerbe reiterated an Underweight rating on Popular, Inc. (NASDAQ: BPOP).

According to the report, “The Government Development Bank for Puerto Rico released its Economic Activity Index (EAI) for November, showing a decline of 5.7% Y/Y (versus 5.4% last month). Changes in this index are highly correlated with the Puerto Rico economy, with an R-squared of 90%, making this a relevant data point for investors in BPOP.”

Some highlights from the report included:

-”The modest improvement in the economy that we saw during the last two months has essentially stopped.” -”Until we see sustained improvement in the Puerto Rico economy, we see little reason to get more positive on the BPOP shares.” -”We expect increasing provision expense as the economy remains weak, leading to EPS that comes in well below consensus estimates.”

BPOP closed Friday at $28.79.