Goldman Sachs is predicting that HSBC Holdings PLC (LON:HSBA) will return some US$3.5bn of spare cash via share buybacks this year after the bank said Tuesday it will spend a further US$1bn on the re-purchase programme.
Hunting for positives in what was interpreted as a largely negative full-year results statement, Goldman also thinks the Hong Kong and London-based giant is growing at a fast enough pace to mitigate the effects of the head-winds it is facing.
“[The] fourth-quarter results show encouraging signs for loan growth in both Hong Kong and the UK mortgage business,” the Wall Street giant said in a note to clients.
Goldman pegged back its valuation of the stock to 750p a share from 775p, keeping its 'neutral' recommendation.
“We expect the stock (now at around 1.3-times trailing tangible book value), to give up some of its recent gains today,” the Goldman note said.
Of the 16 analysts logged as following HSBC by the Broker Forecasts site only five are ‘buyers’ of the stock. Seven concur with Goldman and are ‘neutral’, while the remainder are ‘sellers’.
The consensus price target of 624p reflects the City’s caution. At 9.50am, the shares were off 6.5% after HSBC’s earnings undershot forecasts, wiping more than £800mln off the value of the bank.