FINANCIAL shares are likely to be the springboard for a further 9 per cent rise in the Irish stock market between now and the end of the year, according to Davy Stockbrokers, which believes that the ISEQ Index may reach 3200 by year end.
"On the face of it, the most transparent value in the market still exists in the financial sector," Davy analyst Mr Robbie Kelleher states. "In spite of the very significant outperformance since the middle of last year, the bank sector trades on multiples which hardly look stretched - a price/earnings ratio of 11 times and yield of 4.3 per cent."
In addition, the multiples for the financials are well below those of the larger Irish industrials which are trading on a multiple of 18 times. Davy is assuming an average 5 per cent growth in the larger industrials in the current year.
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