JPMorgan Cazenove is no longer bearish on Royal Bank of Scotland Group (LON:RBS), having lifted its stance on the shares following a ‘constructive’ meeting with the London-listed bank’s management. The move is a boost for the bailed-out lender, which continues to struggle to return to profitability following its taxpayer-funded rescue during the financial crisis.
RBS’ share price has fallen into the red in today’s session, having lost 0.72 percent to 234.00p as of 10:03 BST, slightly underperforming the broader UK market, with the benchmark FTSE 100 index currently 0.11 percent worse off at 7,106.25 points. The group’s shares have lost more than six percent of their value over the past year, but have recovered just under four percent in the year-to-date.
JPMorgan Cazenove lifted its stance on RBS from ‘underweight’ to ‘neutral’ yesterday, and hiked its price target on the shares from 210p to 230p, following a ‘constructive’ meeting with the lender’s management. Proactive Investors quoted the analysts as noting that there had been a significant build in the litigation reserve to around £11 billion, which one assumes should insulate the FTSE 100 group from the fines and damages. The broker further expects ‘progress’ on the Williams & Glyn unit, which had been earmarked for disposal but may now be retained.
“Near term, UK asset quality remains resilient in our view with Brexit risks long dated and fresh UK elections potentially allowing more time for a deal with the EU,” JPM said in a note to clients, as quoted by Proactive Investors.
The 20 analysts offering 12-month price targets for RBS for the Financial Times have a median target of 230.00p on the shares, with a high estimate of 275.00p and a low estimate of 175.00p. As of April 19, the consensus forecast amongst 24 polled investment analysts covering the blue-chip group advises investors to hold their position in the company. RBS is scheduled to update investors on its first-quarter performance on April 28.