FirstRand still a buy: Analysts

2010-12-08 15:42

Johannesburg - Financial services group FirstRand [JSE:FSR] remains a ?buy? despite the unbundling of MMI shares to FirstRand shareholders on Monday, according to analysts on Wednesday.

Newly-established MMI, which now constitutes the country's third biggest life assurer, was forged through the merging of FirstRand subsidiary Momentum with Metropolitan [JSE:MET].

The unbundling saw 10.56% or 2.20 rand shaved off FirstRand's share price on Monday as the market stripped out the Momentum value. But at one time, the share price was down over 13%, which one or two analysts felt was an ?over-reaction?.

However, pundits have pointed out that the price reflected more or less the exact contribution of the stake. MMI accounted for around 270 cents to 280 cents of FirstRand's trading price.

FirstRand itself pointed out that the fact that the price fell only 13% is a good sign in that the price fell less than the value lost and FirstRand shareholders still get the additional value in the MMI shares.

The group's share price was hovering around the 18.62 rand level in noon trade on Wednesday.

An I-Net Bridge consensus of six analysts has the stock remaining as a 'buy' with one analyst rating it as "market perform'.