The second day proved to be the charm for UOB shares.
The stock climbed 3.05 percent to S$27.04 by the market’s early close at midday Thursday for the Lunar New Year holiday. That followed its 2.24 percent drop on Wednesday despite reporting its 2017 net profit rose 9 percent to a record S$3.39 billion.
For the fourth quarter, the bank’s net profit rose 16 percent on-year to S$855 million.
CGS CIMB upgraded the stock to Add from Hold and raised its target price to S$28.00 from S$25.40 after increasing its 2018-2019 earnings per share forecasts by 4.1 percent to 5.4 percent on higher fees and lower credit costs.
Lag in UOB shares ‘unjustified’
“UOB has lagged peers; we now see a decent entry level for the stock,” CGS CIMB said in a note on Wednesday.
It added that it saw scope for higher dividends ahead and forecast a 90 Singapore cent dividend per share for 2018, which would be a 39 percent payout ratio.
Other analysts were also positive on the stock.
Deutsche Bank said UOB was its preferred pick in the Singapore banking sector.
“UOB is the best capitalised Singapore bank and provides upside risk in a higher payout in the long run. It’s results show resilience,” Deutsche Bank said in a note on Wednesday. “Its lagging stock performance behind Singapore peers appears to be unjustified.”
It has a Buy call on the stock with a S$30.60 price target.