Things are better than expected for Lloyds Banking Group Plc (LON:LLOY), Deutsche Bank analyst David Lock admits, but he still says there’s too little reason to buy the shares.
Lock, who rates Lloyds as a ‘hold’, says the potential upside is limited.
“With the purchase of MBNA Lloyds has bought balance sheet, EPS & margin growth.
“This, combined with continued better-than-expected credit quality in the wake of Brexit means our EPS forecasts rise.
“But we think the shares are already trading at close to fair value.”
Deutsche Bank today lifted its target price for Lloyds to 68p from 58p (the current share price is 65p), and Lock notes that Lloyds currently trades at eleven times 2018’s predicted earnings.
The analyst highlights possible factors for ‘upside risks’ such as an improving economy, as well as better margin and credit quality, while regulation, loan losses and market uncertainty as factors for ‘downside risks’.