Lloyds Banking Group (LON:LLOY) should increase in price once the UK government has a smaller stake, according to JP Morgan Cazenove.
Chancellor of the exchequer George Osborne has pushed ahead with government asset in recent months, and since then the tax-payer’s stake in Lloyds has reduced below 20%.
The bailed-out UK bank is the ‘top pick’ in the sector, according to analyst Raul Sinha, who says the dividend potential is still not priced in.
JP Morgan today upgrades its price target for Lloyds, to 105p from 95p, and repeated an ‘overweight’ recommendation.
“We are raising our above-consensus 2017 EPS estimate on Lloyds by 3% (leaving us c10% higher) following positive UK macro data with a better outlook for loan growth and higher market-implied base rates since the UK Election.
“We believe that Lloyds can positively surprise market expectations.”
HSBC has upgraded its view of water and sewage firm United Utilities (LON:UU.) to ‘buy’ from ‘hold’ and set a price target of 1050p, which suggests some 13% upside to the current price of 929p.
Elsewhere, RBC Capital upgraded UK stockbroker Brewin Dolphin (LON:BRW) to ‘outperform’ from ‘sector perform’. With a 335p price target the Canadian bank reckons the London quoted share can rise more than 11% from current levels.
Barclays Capital snips Trinity Mirror’s (LON:TNI) price target to 160p from 185p.
On the same day as unquoted sector peer Cuadrilla faces a pivotal ruling on its planning application for fracking sites in Lancashire, IGas (LON:IGAS) has had its price target lowered by Jefferies to 41p from 43p.
Jefferies does, however, repeat a ‘buy’ recommendation.
Analyst Mark Wilson says securing planning consents for future work programmes will be a critical factor in IGas’s plans for its first hydraulically fractured well in 2016.
He also highlights that Jefferies £112mln valuation of IGas is still significantly below the value of the company’s ‘carried’ work programmes which will be driven by partners INEOS, Total and GDF, and amount to US$285mln.