Investec has reiterated its ‘buy’ recommendation for Lloyds Banking (LON:LLOY) ahead of the lender’s third quarter interim management statement this month.
The bank, in which the UK tax-payer has a diminishing stake, has racked up attributable losses of £4.2bn over the last five years, Investec notes, but the suffering could finally be about to end, with impairment charges tipped to drop to around £100mln.
That may sound a lot to the average Lloyds customer, but it is a drop in the ocean to a City banker.
Investec forecasts underlying profit before tax of £2.3bn, up 3% quarter-on-quarter, and believes “below the line” negative insurance volatility could be the only item that might frighten the (black) horses.
The broker has a price target of 86p, which is not far off the 89p 2015 peak reached on 15 May, since when the shares have tumbled to around 75p.
Meanwhile, German banking titan Deutsche Bank says it is not all bad news on the margins front for UK banks.
“Margins on new business remain below the back book; however, deposit costs have continued to fall, and new mortgage rates appear to have stabilised in recent months,” Deutsche asserts in a note that previews the third quarter results of the high street banks.
Deutsche has shaved 4p off the 310p price target of Barclays (LON:BARC), a penny off the 97p price target of Lloyds Banking (LON:LLOY) and 6p off the 355p target price of Royal Bank of Scotland (LON:RBS).
Cantor Fitzgerald has initiated coverage of DekelOil’s (LON:DKL) following news yesterday that the palm oil producer’s kernel crushing plant is in the wet testing phase and pilot production has commenced.
It kicks off coverage with a ‘buy’ recommendation and a punchy 1.75p price target, versus the current share price of around a penny.
“We think DekelOil’s operations in Cote d’Ivoire represent a strategic asset in an attractive market. The shares look cheap on our valuation and with a progressive stream of improvements in output we think the company should be able to deliver both organic growth and catalysts to unlock this value,” the Canaccord team declared.
“While palm oil prices have been under pressure our valuation reflects the current weakness and we see room for optimism in the near and medium term that would result in upgrades,” it added.
From palm oil to potash sounds like a memoir you’d go on holiday to avoid reading, but in this case it refers to a switch in focus to Sirius Minerals (LON:SXX), which has received the key outstanding decision notice for the mine and mineral transport system from the North York Moors National Park Authority (NYMNPA).
It is another step in de-risking any investment in the potash asset developer, notes Shore Capital.
“While an investment in Sirius will become progressively de-risked as the company advances towards production, we believe that it already offers a more robust, lower-risk investment with the prospect of better returns than typical of its peers,” the broker said, reiterating its ‘buy’ recommendation and 50p a share valuation.
Shares in Sirius currently trade at around 17.75p.
If Sirius shareholders are in celebratory mood, so, in all probability, are backers of Stratex International (LON:STI), which is now less than a month away from the first gold pour at its Altintepe gold project in Turkey.
“Production and cash flow generation will be an important milestone for Stratex as it looks to advance its other projects,” said Northland, as it reiterated its ‘buy’ rating and 7.8p price target.