Morgan Stanley has raised its target price for HSBC PLC (LON:HSBA) to 900p from 850p and repeated an ‘overweight’ rating on the stock as it thinks the narrative on the global bank is likely to shift to "business as usual".
In a note to clients, the US investment bank’s analysts said that this shift follows years of restructuring and deferred prosecution agreements (DPA) with authorities.
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They said the price target hike reflects increases to its pre-tax profits forecasts for the FTSE 100-listed group of around 3%, which takes their numbers to about 5%-7% above consensus estimates for 2019-2020.
The analysts added that their new estimates price in significantly higher net interest incomes and less buybacks to account for risk-weighted asset growth.
They concluded: “HSBC is one of our top picks in Europe, with a unique set-up combining growth and yield. Despite recent share outperformance, we think there is more to go.”
In late morning trading, HSBC shares were 0.7% higher at 744.1p.