A pair of brokers raised their target prices for both Royal Bank of Scotland Group PLC (LON:RBS) and Lloyds Banking Group PLC ((LON:LLOY) today in the wake of last week’s buoyant results from the two part-taxpayer owned lenders.
Barclays Capital raised its target for RBS to 260p from 250p to reflect medium-term earnings upgrades following last Friday’s first-quarter numbers, albeit while maintaining an ‘equal-weight’ rating on the stock.
In a note to clients, the BarCap analysts said: “A combination of continued strong UK mortgage growth, margin expansion, a particularly strong trading contribution from the rates business and progress on cost cutting showed what a clean RBS could look like.”
READ: RBS reports first quarterly profit since 2015
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Meanwhile, in a separate note, BarCap reiterated an ‘overweight’ stance on Lloyds as it hiked its target price to 77p in line with an earnings upgrade after that lender’s first-quarter numbers last Thursday.
Its analysts said: “Lloyds positively surprised the market with a stronger net interest margin and lower provision charge than expected.”
However, they added: “Although the lower provisions may not be sustained, the improved net interest margin looks stickier with further liability cost reduction expected to largely offset asset pricing pressure.”
READ: Lloyds gains as Q1 results beat forecasts
Less bullishly, Citigroup hiked its target price for Lloyds to 63p from 55p to reflect increased earnings per share forecasts, raised dividend forecasts after a strong capital build in the first quarter, and the bank’s lower cost of equity, while maintaining a ‘sell’ rating on the stock.
Citigroup also retained its ‘sell’ stance on RBS while hiking its target price to 220p from 190p to reflect strong increases in its earnings per share forecasts for the lender.
The US bank’s analysts said their 2020 revenues estimates for RBS are now above the company targets, but added that they “remain more cautious on costs.”
In late morning trading, RBS shares were 0.1%, or 0.2p higher at 265.6p, having gained over 4% on Friday after reporting its first quarterly profit since the third quarter of 2015.
Lloyds shares edged up by just 0.04p to 69.24p, having gained around 2.5% on Thursday when its first-quarter pre-tax profits more than doubled.
HSBC also hiked its target price for Lloyds today, to 76p from 75p, maintaining a ‘buy’ rating on the stock. And Goldman Sachs inched its target for Lloyds up to 58p from 57p, but retained a ‘sell’ stance.