logo-loader
viewLloyds Banking Group

Lloyds "attractively valued" says UBS even after cutting targets

After disappointing third-quarter results and amid a tougher income outlook, UBS cut its earnings per share forecasts 2-5% for the next few years

Lloyds Banking Group
The Swiss bank cut its share price target for Lloyds to 62p from 65p

Lloyds Banking Group PLC (LON:LLOY) is doing better than its rivals in defending profits in what is a challenging market, UBS said, but still cut its estimates for the lender.

The Swiss bank, in a note to clients published on Monday, cut its share price target for the FTSE 100-listed bank to 62p from 65p but maintained its ‘buy’ recommendation.

Last week’s third-quarter numbers from Lloyds were “disappointing”, with adjusted profit before tax of £1.8bn that was 8% below the City consensus but net interest margin in line with expectations at 2.88%.

Despite a tougher top-line outlook, which saw UBS cut its earnings per share forecasts 2-5% for the coming years, this “we believe the investment thesis at LBG has not changed materially”.

On the conference call with analysts after the results, the board reinforced their plans for balance sheet growth, a 6% dividend yield and 2% of market cap buyback each year by stressing that there was to be no change to the strategic target of 170-200 basis points of annual capital generation.

“This capital generation should also allow the bank to continue to invest in efficiency and customer proposition, helping to underwrite future growth and returns,” UBS said.

Lloyds is “under tight control in a challenging top-line environment”, UBS said, suggesting the shares are “attractively valued for a stable-rates base case with upside gearing if the macro outlook improves”.

Quick facts: Lloyds Banking Group

Price: 57.11 GBX

LSE:LLOY
Market: LSE
Market Cap: £40.01 billion
Follow

Add related topics to MyProactive

Create your account: sign up and get ahead on news and events

NO INVESTMENT ADVICE

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...

FOR OUR FULL DISCLAIMER CLICK HERE

Watch

Full interview: Argo Blockchain CEO 'super optimistic on 2020' as it...

Argo Blockchain PLC's (LON:ARB) Peter Wall chats to Proactive London's Andrew Scott soon after assuming the role of CEO. He says they're ahead of schedule to reach their goal of 17,000 installed machines by the end of the first quarter of this year. ''2020 is really about optimising what...

6 hours, 29 minutes ago

2 min read