Lloyds Banking has received a hefty 58% price target upgrade from Jefferies, which sees scope for larger buybacks and better margins in 2023.
The US bank has raised its share price estimate to 77p on base case estimates, keeping its investment rating at ‘buy’.
Jefferies expects much less damage to Lloyd’s net interest margins from deposit migration, mortgage churn and back-book roll-off than consensus forecasts.
Talks with pension trustees about the triennial review also point to the end of the variable component of current contributions, which would free up £1.2bn of capital annually.
Allied to higher cash generation targets and cost-cutting, this would allow for buybacks over the next three years of £3bn, £2.5bn and £2bn respectively or £8bn in total.
On its best case scenario, Jefferies' target price is 87p and 41p on a worst case basis.
Shares today rose 0.4% to 49.07p.