HSBC has lifted its rating on Royal Bank of Scotland Group (LON:RBS), despite identifying several outstanding issues for the bailed-out lender. The analysts, however, have pointed to the stock recent ‘lacklustre’ performance.
RBS’ share price has slipped marginally into the red in today’s session, having lost 0.43 percent to 257.10p as of 14:26 BST, outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.88 percent lower at 7,325.12 points. The group’s shares have added nearly a third to their value over the past year, and are up by some 14 percent in the year-to-date.
HSBC lifted its rating on RBS from ‘reduce’ to ‘hold’ today, and hiked its price target on the shares from 210p to 250p, pointing to the stock’s lacklustre performance and higher forecasts, raised on the back of lower cost of risk and expenses.
The analysts nevertheless outlined several issues, including the UK’s pending exit from the European Union.
“We are not just concerned about Brexit here. The recent UK election results mean the possibility of another early election cannot be ruled out,” HSCB said, as quoted by Proactive Investors, adding that it saw a chance for the Labour party to gain further momentum.
“Given the latter’s previous manifesto pledge to explore ways of breaking up RBS, we believe investors need to keep this risk firmly in mind,” the broker cautioned.
The 20 analysts offering 12-month price targets for RBS for the Financial Times have a median target of 260.00p on the shares, with a high estimate of 346.00p and a low estimate of 210.00p. As of August 4, the consensus forecast amongst 24 polled investment analysts covering the blue-chip group advises investors to hold their position in the company.