Davy gives BoI 'outperform' tag
Bank of Ireland shares hit a 12-month high yesterday after stockbrokers Davy upgraded the stock to "outperform" in a note to investors.
Shares closed up 5.1pc following the upgrade, ending the session at 17 cent each, the highest closing price since May 2011.
The bank's shares have now surged by a third in little over a week. The stock closed at 13.10 cent on March 1, before financial results were announced on Monday, March 4.
The move by Davy comes after Goodbody Stockbrokers last week changed its recommendation on Bank of Ireland to "buy", with a price target of 16 cent per share. At the time stock was trading at 14.3 cent.
Davy said it upgraded Bank of Ireland shares from neutral to outperform after raising its estimate for the bank's 2013 operating profit by 36pc.
Operating profits will increase thanks to an improving margin on lending and savings associated with the Government move to scrap the bank guarantee. Bank of Ireland paid €388m in guarantee fees last year and is likely to pay €170m this year, Davy said.
Crucially the stockbrokers say the bank's net interest margin will be 1.5pc in 2013 and 1.65pc next year, beating previous estimates of 1.37pc and 1.49pc respectively.