Proactive Investors - Run By Investors For Investors

Brokers: RBS, Lloyds and Barclays all downgraded

a view of Canary Wharf where all the major banks have offices
Several banks were downgraded by brokers on Monday

Banks felt the wrath of brokers on Monday as the effects of last week’s referendum result continue to rumble on.

Jefferies International said that, following the Brexit vote, it moves “to a slow growth/ modestly recessionary scenario for the UK banks”, while JP Morgan Cazenove also re-confirmed its “cautious banking sector view”.

Royal Bank of Scotland Group PLC (LON:RBS) was downgraded by four brokers, with Jefferies, Barclays Capital, RBC Capital Markets and JP Morgan Cazenove all revising their assessments of the stock.

Jefferies moved RBS to a ‘hold’ recommendation from ‘buy’; Barclays downgraded the stock from ‘equal weight’ to ‘underweight’; while JP Morgan Cazenove also lowered its rating to ‘underweight’ from ‘neutral’.

RBC Capital Markets was perhaps the most brutal of the four, downgrading RBS to ‘underperform’ from ‘outperform’, while setting a target price of 165p, some 40p below this morning’s opening price.

Another bank, this time Barclays PLC (LON:BARC), was downgraded by JP Morgan Cazenove from ‘overweight’ to ‘neutral, while Jefferies International lowered the stock from a ‘buy’ recommendation to ‘underperform’.

Jefferies also slashed its target price for the stock from 287p down to 115p, saying the bank’s earnings power has been “substantially diminished” by the UK’s vote in favour Brexit.

Lloyds Banking Group PLC (LON:LLOY) was moved down to an ‘equal weight’ rating from ‘overweight’ by Barclays Capital, while the stock was also downgraded by JP Morgan Cazenove  to ‘neutral’ from ‘overweight’.

One bank to buck this trend was HSBC Holdings PLC (LON:HSBA), which was upgraded by JP Morgan Cazenove to ‘neutral’ from ‘underweight’.

Airlines weren’t faring much better than banks on Monday, reflected in Cantor Fitzgerald’s downgrade of Easyjet PLC (LON:EZJ) to ‘hold’ from its previous ‘buy’ recommendation.

Cantor said it had cut its full year profit before tax forecasts by £100mln after the airline issued a profit warning.

The broker also believes that “the potential impact on demand and yields” from the Brexit vote may cause problems for EasyJet.

On a more positive note, the same broker reiterated its ‘buy’ recommendation for Royal Mail PLC (LON:RMG) and also repeated its target price of 550p.

Cantor said that the postal service group could be a “good potential safe haven” in this current period of instability.

It says market expectations for profits and margins this year “appear conservative” and believes significant efficiency savings will help to boost the bottom line.

Elsewhere, Northland Capital Partners has reiterated its ‘buy’ recommendation for Mariana Resources Ltd. (LON:MARL) and repeated its 5.4p target price.

The broker says that Mariana has two “major milestones” on the horizon at its 30%-owned Hot Maden gold/ copper project.

Northland says one of those milestones, the preliminary economic assessment (PEA), will give investors an initial impression of the project’s economics and metrics.

The same broker has also repeated its ‘buy’ recommendation for fellow small-cap SalvaRx Group PLC (LON:SALV), while reiterating its target price of 149p.

Northland says that the company is “grossly undervalued”, because it has exposure to three cancer immunotherapy programmes which are funded through early clinical trials.

The broker says the cancer immunotherapies market will smash the US$80bln barrier by 2020, hence the price target which is five times its current price.

No investment advice: The Company is a publisher and is not registered with or authorised by the Financial Services Authority (FSA). You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter. You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate. From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

© Proactive Investors 2019

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use