First Metro Securities turns bullish on stocks

First Metro Securities Brokerage Corp. of the Metrobank Group is bullish that the Philippine equities market next year is finally set to take off.

- MARIANNE GO

In a briefing at the start of the week for the Monday Circle Group at the Westin Manila, analysts of the FirstMetroSec, led by vice president Andro Beltran, project an improving growth outlook for next year "especially as the cycle transitions from the slowdown phase to early recovery."

It was also their observation that "the Philippines is relatively less vulnerable to Trump 2.0 policies given our domestically-driven economy and ample reserves. More importantly, the Philippines is a key geopolitical ally in the Asia-Pacific region."

As such, FirstMetroSec projects that "there is a path to double-digit earnings growth driven by the return of positive leverage, alongside potential AI-driven efficiency gains."

However, they acknowledged that they "see low valuations at the starting point," but expressed the view that "Trump 2.0 policies will continue to weigh on Philippine equity valuation in the near to medium term," but with "a large degree of uncertainties surrounding such policies already priced in."

They pointed out that "markets are fickle and will react swiftly to new data." As such, they also project "a tight tug-of-war between the improving fundamental and the uncertainties surrounding possible Trump 2.0 policies which lay out a volatile price trajectory in the next 12 months."

FirstMetroSec's index target range and assumptions sets three scenarios.

Its bull case projection is for an end-2024 index at 8,600 with an EPS (earnings per share) estimate for 2025 of a positive growth of 13.3 percent. A base case scenario sees the index at the end of the year at 7,600 with the EPS posting a growth of nine percent and projecting an 11-percent growth in 2025. The bear case scenario projects a yearend index at 6,600 which would translate to a 2025 EPS of a much lower 6.4 percent.