OTP Bank Nyrt. (OTP), Hungary’s largest lender, headed for the highest level in more than two weeks as JP Morgan Chase & Co raised its target price for the stock as Russian and Ukrainian units help improve profit.
The shares rose as much as 1.3 percent and traded 0.8 percent up at 4,858 forint by 10:03 a.m. in Budapest, the highest price on a closing basis since Feb. 19. JPMorgan lifted its target price to 6,200 forint from 5,400 forint, maintaining the recommendation at overweight. The benchmark BUX stock index strengthened 0.4 percent.
Expansion in “high margin” business in Russia and Ukraine will help offset the burden of special taxes levied on lenders in OTP’s core Hungarian market, London-based analysts at JPMorgan’s Cazenove unit including Paul Formanko wrote in a report today. OTP may report adjusted 2012 net income of 120 billion forint ($522 million) tomorrow, compared with JPMorgan’s previous estimate for 103 billion forint, the analysts said.
“OTP’s transformation to a higher margin/return on equity consumer bank is expected to continue to accelerate in 2013- 2014,” JP Morgan said.
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