A well-followed broker called the negativity towards Lloyds Banking Group PLC (LON:LLOY) ‘excessive', as it gave its assessment of the mooted acquisition of MBNA’s UK credit card book.
Aussie house Macquarie sees the deal boosting next year’s earnings per share (EPS) by around 5%. This assumes absolutely no cost savings, it added.
However, the note does say the success, or otherwise, of such a purchase ‘is all about the price’. Isn’t it always?
Macquarie’s Namita Samtani thinks Lloyds can afford to pay around £2.9bn for the business, which equates to 10.5-times earnings or one-times' the book’s tangible value.
The analyst rates the stock ‘overweight’ with a price target of 65p
“We have not been habitual fans of Lloyds, but we think the market’s current negativity towards the shares is excessive,” the stock picker said in a note to clients.
Fellow analysts appear more charitable towards the black horse bank. Of the 15 logged by the Broker Forecasts site as following the lender, only three are ‘sellers’.
Seven are ‘buyers’ of the stock, while the remainder think it is fully valued.
The consensus price target has been pegged back from 85p six months ago to 60p - in line with the current share price.