Santander's Discount Seems Questionable After Brazilian Election

Dow Jones10-06

0842 GMT - Banco Santander's discount to peers is difficult to justify, especially as first-round results from Brazil's election may calm investors, Citi analysts write. Market-friendly candidate Flavio Bolsonaro received stronger-than-expected support in the first round of the election, but uncertainty remains ahead of the second round later this month, Citi notes. Brazil contributes 15% of Santander earnings, making the election a key topic for investors. Santander continues to trade at a discount to peers despite strong earnings growth, Citi adds. "While Brazil remains a key risk, we believe the magnitude of SAN's valuation discount appears difficult to justify based on our earnings and cost of risk assumptions," the analysts say. Shares are up 1.6%.

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