Dear Investor,
Guaranty Trust Bank recently broke its 9 years resistance level of NGN32.00 and closed at a price of
NGN35.28 last week Friday, a level not seen in the last nine (9) years having last reached similar levels on the
11th of April 2008 closing at a price of NGN36.10. Visibly
there
seems to be increased interest and positive sentiments towards
the banks shares as the stock has returned a year to date
(YTD) return of about 42.83%.
Given its outstanding performance in its FY’16 and Q1’17 result in
which the bank continued to impress shareholders, there is no need to
wonder why the share price has soared to this level relative to its
performance.
Nonetheless,
given the increased interest in GTB shares both from local and foreign
participants, we begin to think through what price we expect to be the
new resistance level
for the bank share price.
We
are of the opinion that given the increase in the banks share price, we
do not see any further significant increase in price even as its
dividend yield has dropped significantly
lower when compared to its peers in the banking industry. We therefore
suggest that holders of the stock should gradually sell down their
holdings with the intention to buy back at a later date once there is a
price correction on the company share price.
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