< The 2015 All-Europe Research Team
Michael Helsby, Alastair Ryan & team
Bank of America
Merrill Lynch
First-Place Appearances: 11
Total Appearances: 31
Team Debut: 1990
Michael Helsby, 42, and Alastair Ryan, 43, lead Bank of America Merrill Lynch to its second straight No. 1 appearance on this roster as well as its first top finish for coverage of U.K. equities. Six of the analysts in the banks group are based in London, and the seventh works out of Madrid; together they report on 38 stocks. Their tracking of European Central Bank actions and the impacts of those moves on regional banking especially impresses one investor, who notes also that they “offer a one-stop research approach by providing input as well on the credit side.” Another fund manager echoes that opinion, observing that “the team provides good service, including specialist sales, so an all-around coverage of a complex sector.” Among the BofA Merrill crew’s favorite names going into 2015 is Barclays, the second-largest lender in the U.K., by assets. To drive long-term performance, in May management launched a groupwide rebalancing plan, and the researchers believe it will deliver significant share price upside. “Barclays has laid out a strategy of cutting the proportion of the bank’s capital supporting the investment bank from over 60 percent of total to 30 percent. Reducing capital in the investment bank and the broad cost reduction focus, together, are set to raise potential returns on equity and rapidly build capital ratios,” explains Ryan. “As Barclays becomes less systemically important, required capital levels could also fall. This combination should move the group to a position where its dividend payouts can step up strongly.” He and his colleagues forecast a 38.8 percent upside to the stock’s trading value at the end of January, assigning Barclays a target price of 325p. Considering the sector as a whole, the analysts’ outlook is positive. The group trailed Europe’s broad market by 13.1 percentage points over the 12 months through January, slipping 5.1 percent, but they anticipate a boost from the central bank’s easing monetary policy. “We expect the ECB’s balance sheet expansion to be constructed so as to be positive for bank earnings and capital,” notes Ryan. “As the massive expansion picks up pace through 2015, we see positive implications for collateral values and ultimately for loan demand.”