Lloyds Banking Group PLC (LON:LLOY) posted strong quarterly results and the outlook is solid but the share price already reflects this reckon analysts at Macquarie.
Underlying profits were 10% above expectations at £2.1bn in the three montsh to March as impairments were lower and net interest income higher than expected.
Margin guidance was nudged upwards by the bank and capital generation will be towards the top end of guidance.
On the back of that Macquarie has raised its earnings per share expectations by 4% to 7.7p and 1% to 7.4p for for 2017 and 2018 and its target price to 67p from 65p.
Even so, on an price to asset value basis, Lloyds (1.3x) already trades at a big premium to RBS (0.9x) and Barclays (0.6x), which is likely to shrink as bad debts normalise.
Lloyd’s gearing to the mortgage and unsecured sectors make it a more obvious candidate for investors to worry about if there is to be an impact on the UK economy from a hard Brexit.
In short fairly valued at present says Macquarie, hence a neutral recommendation.
Shares rose a touch to 69.5p.