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Royal Bank of Scotland finally a ‘buy’, says UBS

Royal Bank of Scotland finally a ‘buy’, says UBS
The Swiss bank says RBS has now fallen too far, so it is now lower risk and more attractive.

It has been while, but UBS says the time to buy Royal Bank of Scotland (LON:RBS) has now arrived, according to UBS.

Analyst Jason Napier, in a note, said: “the recent sell-off has seen RBS fall too far, in our opinion, leaving it a lower risk and more attractive return prospect than the market appreciates.”

And Napier added that a ‘legacy free’ version of the bank, which is still about 73% owned by the UK Treasury, would trade in-line with Lloyds (LON:LLOY).

He says the market is applying a £19bn – 63% of the current market capitalisation – discount to the bank’s value due to its legacy issues. According to Napier the uncertainties will begin to clear, and it would then be only a matter of time for the bank to see a re-rating of its shares.

UBS now has a ‘buy’ recommendation for RBS, and it has a 350p price target which suggests some 27% upside to the current price of 254p.

Separately, Napier also described Lloyds as having ‘undervalued pay-out power’ as UBS repeated a ‘buy’ recommendation for the bank, but, reduced its target price to 88p from 97p.

Analysts at HSBC have upgraded oil services engineer Wood Group (LON:WG. to ‘buy’ from ‘hold’, setting a price target of 675p which is some 12% higher than the current price of 599p.

At the same time, HSBC downgrades sector rival Amec Foster Wheeler (LON:AMFW)  to ‘hold’ from ‘buy’. And, separately, Weir Group (LON:WEIR) has today been marked down by both Jefferies and JP Morgan Cazenove; which now rate it as ‘underperform’ and ‘underweight’ respectively.

Vodafone (LON:VOD) is fancied by Jefferies, which upgrades to ‘buy’ from ‘hold’ and also lifts the price target to 250p from 230p.

Goldman Sachs downgraded defence technology firm QinetiQ (LON:QQ.) to ‘sell’ from ‘neutral’.


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