Popular Inc (NASDAQ:BPOP) is poised to benefit from tailwinds supporting the Puerto Rican economy, according to Truist Securities.
Analyst Arren Cyganovich initiated coverage of the company, best known as the parent of Banco Popular de Puerto Rico, with a Buy rating.
The Popular Thesis: Being Puerto Rico’s biggest bank by a large margin, Popular enjoys a "first look" advantage, which means it is the first bank to be considered for nearly all large transactions and investments, Cyganovich said in the initiation note.
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"We see this as a meaningful advantage that should continue over the years ahead," he wrote.
Several structural tailwinds supporting the Puerto Rican economy, including federal infrastructure funds. Some $45 billion is earmarked to be disbursed over the next decade. And federal funds are likely to continue flowing for several years, including around $7 billion annually for hurricane disaster-related funds.
Corporate investment, including onshoring of manufacturing in the U.S., should also drive investment in Puerto Rico.
"Popular represents what we view as the safest way to play the structural benefit and excess capital themes given its dominant market share position," he further wrote.
BPOP Price Action: Shares of Popular had declined by 0.48% to $125.22 at the time of publication on Thursday.
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