< The 2016 All-Europe Research Team
Iñigo Egusquiza & team
Kepler Cheuvreux
First-place appearances: 0
Total appearances: 6
Team debut: 2005
In its best showing to date, Kepler Cheuvreux captures second place, vaulting from runner-up with a team under the guidance of Iñigo Egusquiza. The 42-year-old head of Iberian research, who holds a bachelor’s degree in economics and business administration from Spain’s Universidad Comercial de Deusto Bilbao, is in his second stint with the firm. For nearly seven years he reported on construction, media, property and retail stocks for Crédit Agricole Cheuvreux, then moved in 2005 to Santander, where he specialized in small- and midcap names. Egusquiza returned to the firm in January 2011 to cover Spanish SMIDs and assumed his current position in November 2013. (Kepler Capital Markets had acquired CA Cheuvreux that April.) Tracking 65 companies in Iberia, his seven-strong, Madrid-based crew is especially good at producing “in-depth, 360-degree reports on big euro zone issues like energy transition and climate change,” says one fund manager. Broad themes inform the analysts’ upbeat outlook on two of their favorite Spanish companies: Acerinox and Meliá Hotels International. In June stainless steel manufacturing conglomerate Acerinox joined the Ibex 35 for the first time since December 2013, when it was dropped from the index of the most liquid securities traded on the Bolsa de Madrid. The producer’s stock was then being buffeted by ongoing sluggishness in Europe, uncertainty regarding M&A activity in the regional industry and overcapacity. Management, however, has maintained its focus on consolidating the modernization of its commercial enterprises and diversifying both its funding sources and its geographic presence — Acerinox boasts operations in 36 countries and sales in some 50 more. Moreover, the stock is enjoying tailwinds from a rebound in stainless steel base prices in Europe and the U.S., the biggest market for Acerinox’s products; healthy demand; and antidumping measures restricting imports. Even still, it is trading “at the low end of the historical valuation range and at a premium to its peers — but offers higher returns,” notes Egusquiza. He and his associates reason that a price of €12.40 is justified; the shares closed at €7.67 in mid-January. For its part, Meliá operates hotels and resorts across four continents and offers investors “a safe option within the industry,” he says. Since the November terrorist attacks in France, booking cancellations and pricing discounts have resulted in a sell-off in Europe’s travel and leisure sectors. But given its exposure to markets outside the region, the hotelier has emerged as “a more defensive stock,” the team leader notes. The researchers foresee considerable upside for its stock, deeming it attractively valued and likely to reap benefits from the executive team’s three-year strategic plan, which includes shedding assets, and a potential upside surprise from a Cuban property. Their target for Meliá is €14.75, which represents a 43.9 percent premium to the shares’ value in mid-January.