RBC revises BBVA rating amid stretched valuation
RBC Capital on Wednesday moved Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA) from an Outperform rating to Sector Perform, while adjusting its price target upward to EUR19.75 from EUR19.25. The analyst decision arrives with the Spanish lender having delivered a 138% return over the previous year and trading close to its 52-week high of $26.14.
Analyst view and valuation concerns
Benjamin Toms of RBC acknowledged that BBVA "is best in its class across a number of metrics" but signaled concern that the bank's present valuation could limit additional share price appreciation. RBC highlights that BBVA currently trades at 2.1 times tangible book value per share, a multiple the firm believes already reflects the company's attractive value creation embedded in current consensus estimates.
Relative preference for Santander
Looking toward 2026, RBC expressed a comparative preference for Banco Santander (SAN), indicating it sees "lower hanging fruit" there versus BBVA's more fully valued position. That preference underpins RBC's decision to moderate BBVA's rating despite the bank's recent market performance.
Recent financials and investor considerations
BBVA reported third-quarter 2025 results that came in below analysts' expectations. The bank posted earnings per share of $0.42, missing the forecast of $0.53, and reported revenue of $6.64 billion compared with an expected $10.33 billion. Investors will also be watching BBVA's upcoming earnings report on February 5 for additional information on growth prospects and profitability.
Despite the earnings miss, BBVA maintains a long history of shareholder distributions, having paid dividends for 35 consecutive years and currently offering a dividend yield of 2.29%.
Strategic financing and other analyst actions
Separately, the European Investment Bank Group invested c714 million in BBVA securitizations, facilitating roughly c1.3 billion in financing targeted at supporting liquidity and investments for small and medium-sized enterprises in Spain, as well as sustainable housing projects. This injection is positioned as a support for targeted lending programs.
Meanwhile, BofA Securities raised its price target on BBVA to EUR24.30 from EUR21.00 and kept a Buy rating, citing BBVA's solid market positions in Mexico, Türkiye, and Spain. The juxtaposition of a downgrade from RBC and a higher target from BofA underscores competing analyst assessments amid the bank's mixed financial signals.
Implications for investors
The combination of a significant one-year share price gain, a valuation at 2.1 times tangible book, a recent earnings shortfall, and targeted external financing creates a layered picture for investors. RBC's adjustment signals caution on further upside given current market prices, while other brokers maintain more bullish targets based on geographic market strengths.