National Bank of Greece S.A. (NYSE: NBG) was featured positively on Tuesday by the Nomura analyst team covering the European banking sector. The call actually has a bit of mixed data in it, but this is yet one more positive mention for NBG — and its ADS holders in the United States.

Nomura raised its rating to Buy, and that upgrade was all the way up from a prior Reduce rating. Where the call gets a bit convoluted is that the price target was lowered to 2.90 euro from 3.10 euro. Another issue is that the earnings estimate for the first year was trimmed to 0.14 euro from 0.15 euro per share for this year. The next year’s estimate was taken to 0.28 euro from 0.30 euro per share.

We pointed out in our daily analyst upgrades and downgrades that this was not exactly a country upgrade. In fact, NBG rival Piraeus Bank was downgraded to Reduce from Neutral. Still, it is not normal to see the equivalent of a Sell rating rise to a Buy rating. Usually Sell is only raised to Neutral because issuing a Buy rating is just too big of a jump on a reversal of direction.

ALSO READ: Banks With the Most Profitable Stock Buyback Plans

Another issue is that this is not a universal upgrade of the PIIGS in Europe. The banks in Spain and Portugal were unchanged, although Nomura was talking up a mild recovery as the base-case scenario for Italy.

Nomura’s team said:

Following the recent recapitalization, we adjust our target price to EUR 2.9. However, given valuation, we upgrade the rating to Buy from Reduce. After falling 42% year-to-date, we believe relative valuation and risks warrant a more positive view. While trading at a similar Price to Net Asset Value valuation to other Greek banks, we believe the outlook for returns is higher. One of the risks to our current estimates will be the confirmation of the disposal of a minority stake in Finansbank. We estimate that NBG’s 2016E ROTE and P/E could fall to c13% and 7.2x, respectively, if a 20% stake in Finansbank is sold in the second half of 2014; however, this should continue to leave upside from current prices.

Again, the Piraeus downgrade means that this not necessarily a unilateral upgrade of Greece’s banking system. The team said:

After some recent outperformance and given relative valuation and asset quality risks, we downgrade Piraeus to Reduce from Neutral. Our target price of EUR 1.50 remains unchanged.

The ADSs for NBG were trading down almost 2% at $3.51, versus an adjusted 52-week trading range of $2.85 to $6.48. One would have assumed that the rating change may have pulled investors in, but the weakness in European bank stocks (and their ADSs trading in New York) may be too much ahead of the highly anticipated announcement of quantitative easing in Europe later this week.

Other NBG ratings upgrades in the recent weeks have been as follows:

• Raised to Overweight from Neutral at J.P. Morgan (May 16)
• S&P raised its credit ratings on NBG (May 14)

ALSO READ: Eleven Ways to Avoid a Stock Market Crash

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.