Lloyds Banking Group PLC (LON:LLOY), HSBC PLC (LON:HSBA) and the UK’s big lenders shares have all received a boost as a number of analysts said the sector was on the road to recovery and raised their targets.
The road is likely to be “bumpy”, analysts at Barclays said, with the renewed lockdown restrictions leading them to trim their forecasts for 2021 but still lift their share price targets.
“We remain constructive in the medium term given a likely H2 economic recovery, improving profitability, rebuilding capital distributions, strategic actions, and undemanding valuations,” the analysts said in a note to clients.
Barclays ups target for HSBC to 400p from 380p, for NatWest to 165p from 150p, Standard Chartered PLC (LON:STAN), for Virgin Money UK PLC (LON:VMUK) to 170p from 165p, for OneSavings Bank PLC (LON:OSB) to 500p from 460p, and for Metro Bank PLC (LON:MTRO) to 130p from 100p.
Dependent on the pace of vaccine rollout and effectiveness against new COVID-19 variants, the analysts said “the situation remains fluid” but they remain constructive on the sector, with Lloyds the preferred name in the UK.
Deutsche Bank’s analysts also upped their targets for pretty much the whole UK sector in a note on the wider European sector entitled “brighter days ahead”, though the German bank did not select any UK names among its ‘top picks’.
Summing up the UK sector, the analysts noted that the rise of challenger banks has been hampered by low interest rates, though the competition has pressured margins and forced incumbents to innovate faster.
Deutsche lifted its price target for Lloyds to 38p from 35p, for HSBC to 390p from 350p, for Barclays PLC (LON:BARC) to 180p from 165p, for NatWest Group PLC (LON:NWG) to 140p from 130p, for StanChart to 560p from 480p and for Virgin to 170p from 150p.
These changes follow several last week, with UBS downgrading its rating on Natwest but upping its target to 165p from 145p.
The pair also upped their target on Barclays to 155p from 135p, and to 160p from 145p respectively.
The Swiss bank also upped its price target on Lloyds to 44p from 43p.