Popular downgraded to Equal Weight from Overweight at Wells Fargo

Wells Fargo analyst Timur Braziler downgraded Popular to Equal Weight from Overweight with a price target of $105, down from $115. The firm expects a challenging EPS back-drop for the second half of 2024, as the repricing of fiduciary deposits late in Q2, coupled with the accelerated pace of rate cuts puts pressure on net interest income/net interest margin over the next two quarters. The greater pressure in the second half of 2024 is likely enough to make management walk back their 14% ROTCE guidance for year-end 2025, something that has not been in Wells’ or Street estimates, but is likely enough to pressure the shares. The firm still believes in the longer-term story for Puerto Rico and Popular, and could look to revisit out thoughts once net interest income stabilizes and inflects higher mid-2025.