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Broker snap: Investec downgrades Lloyds after outperformance
Fri, 17th Aug 2012 12:21
Given Lloyds's resilient share price performance so far this year, Investec has downgraded its rating on the bank from 'buy' to 'hold'.
Analyst Ian Gordon said: "Up 27%, Lloyds' shareholders can take satisfaction from the stock's year-to-date outperformance against all other UK banks."
He said that the medium-term outlook for the lender still offers some further recovery with group net interest margin at a tipping point and balance sheet metrics improving.
Meanwhile, the £1bn private equity disposal announced earlier this week is "indicative of a resilient impairment performance despite some deteriorating property-based metrics".
Nevertheless, the broker said that the outlook for return on equity (RoE) recovery "remains painfully slow, with scope for negative surprise".
The target price was reduced by 10% from 40p to 36p to reflect an incrementally slower pace of RoE recovery in the outer years.
Nevertheless, shares were up 2.08% at 33.67 on Friday afternoon, in line with the wider European banking sector.
BC
Analyst Ian Gordon said: "Up 27%, Lloyds' shareholders can take satisfaction from the stock's year-to-date outperformance against all other UK banks."
He said that the medium-term outlook for the lender still offers some further recovery with group net interest margin at a tipping point and balance sheet metrics improving.
Meanwhile, the £1bn private equity disposal announced earlier this week is "indicative of a resilient impairment performance despite some deteriorating property-based metrics".
Nevertheless, the broker said that the outlook for return on equity (RoE) recovery "remains painfully slow, with scope for negative surprise".
The target price was reduced by 10% from 40p to 36p to reflect an incrementally slower pace of RoE recovery in the outer years.
Nevertheless, shares were up 2.08% at 33.67 on Friday afternoon, in line with the wider European banking sector.
BC
