Our 12-month target price for BBAR is AP$11,500 per share. We use a DDM model with a justified PBV multiple of 2.2x based on 11% growth rate and a sustainable ROE of ~21.0%.

We rate BHIP High Risk due to economic uncertainties in Argentina. 

In terms of upside risks to our TP we note the following: 1) if the economy improves faster than expected, loan demand could accelerate; 2) if unemployment is not as affected by the crisis, asset quality could be better than expected; and 3) if inflation comes below our forecasts, there could be less pressure on costs.

In terms of downside risks to our TP we note the following: 1) if the economic halt is longer than expected, NPLs could reach new historical highs; 2) if the crisis is more prolonged, loan demand could continue muted for longer; and 3) if inflation comes above our forecasts, it could pressure costs.

If the impact on the company from any of these factors proves to be greater/less than we anticipate, we believe the stock will likely have difficulty achieving our target price or could outperform it.