AFRINVEST: Banking, Telecoms, Insurance Top Picks in Latest Stock Ratings

Afrinvest Research has released its latest stock recommendations, highlighting opportunities in the banking, telecommunications, and insurance sectors as the Nigerian Exchange (NGX) navigates tough macroeconomic conditions. The report, dated July 28, 2025, shows that select equities could deliver returns of over 80% in the next 12 months.

FCMB, ZENITH Lead the Banks

Among banking stocks, First City Monument Bank (FCMB) emerged as a top pick with a BUY rating. Afrinvest projects a 12-month target price of ₦36.84, implying a 35.9% upside from its current level of ₦27.10. The stock also offers a healthy 5.8% dividend yield and low forward price-to-earnings (P/E) ratio of 1.5x.

Zenith Bank was rated ACCUMULATE, trading close to its ₦40.41 target price. Despite limited upside (+3.3%), it remains attractive to income-seeking investors with a 9.2% dividend yield, the highest among tier-1 banks.

Meanwhile, Stanbic IBTC was rated SELL, as analysts expect a -19.5% downside after a strong year-to-date return of 47.9%.

Airtel Africa Seen with Huge Upside But Rated SELL

Airtel Africa (AIRTELAF) offers the highest potential price gain, with Afrinvest setting a target price of ₦4,178.99—an 80.9% upside from its current price of ₦2,310. However, the stock still received a SELL rating due to risks related to foreign exchange volatility and regulatory uncertainty in key markets.

MTN Nigeria (MTNN) was rated HOLD, offering a more modest +8.2% upside and a stable 5.0% dividend yield.

Insurance Stocks Deliver Quiet Strength

Afrinvest sees strong potential in insurance equities, typically overlooked by retail investors:

– AIICO Insurance (BUY) could rise by 44.6%, from ₦1.12 to ₦1.62, with a 7.1% dividend yield.
– NEM Insurance (BUY) and AXA Mansard (BUY) were also rated favourably with over 30% potential upside and robust returns on equity.

These stocks boast low valuations and are seen as undervalued despite consistent profitability.

Caution for Consumer Goods

Consumer goods stocks presented a mixed outlook. BUA Foods received an ACCUMULATE rating with +25.4% upside, while Dangote Sugar and Nascon were marked SELL due to FX-related cost pressures and expected earnings weakness.

Industrial Stocks Lack Momentum

Afrinvest maintained a cautious stance on cement stocks. Lafarge Africa (WAPCO) was rated SELL, with a projected -17.2% decline, citing shrinking margins and price pressures. BUA Cement and Dangote Cement were not rated in this round of assessments.

Top 5 Stocks by Projected Upside (Afrinvest, July 2025)

Ticker	Rating	Target Price	Upside
AIRTELAF	SELL	₦4,178.99	+80.9%
AIICO	BUY	₦1.62	+44.6%
PRESCO	REDUCE	₦2,153.62	+36.3%
FCMB	BUY	₦36.84	+35.9%
ARDOVA	BUY	₦688.40	+35.6%

Final Word

Afrinvest recommends that investors focus on value stocks in banking, insurance, and telecoms, while exercising caution with consumer goods and cement stocks that may be exposed to rising costs and FX instability.

With inflation and interest rates still elevated, the report advises income-focused investors to favour stocks with strong dividend yields such as Zenith Bank, Seplat, and AIICO.

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