Monday, October 09, 2006

Stock Upgraded: DBS Grp target price raise to 23.1 by JP Morgan

J P Morgan says it has raised its target price for DBS Group Holdings Ltd to 23.10 sgd from 19.80 sgd because it expects the bank's earnings over the next three years to be slightly higher than it previously thought. "We are increasing our target price for DBS stock by 17 pct," J P Morgan said in a note, "as we increase our earnings estimates by 2-4 pct for 2006-2008, and [our] normalized return of equity assumption to 12.5 pct from 12.3 pct." J P Morgan now forecasts that DBS will make 2.22 bln sgd in net profit this year, 2.27 bln sgd next year and 2.42 bln sgd in 2008. The brokerage is keeping its "overweight" rating for DBS. "Domestic-reflation-led growth, with lower exposure to exporters, coupled with margin resilience makes for a good defensive play," J P Morgan said. It said DBS was its top pick among banks here. "We believe the stock is set to outperform on both [an] absolute and [a] relative basis, as it continues the run, after underperforming [the] Singapore finance index since 2001," the brokerage said. At 10.16 am, DBS was down 0.20 sgd or 0.99 pct at 20.00, on volume of 872, 000 shares.

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