Berenberg has lifted its rating on Lloyds Banking Group (LON:LLOY) on valuation grounds, WebFG News has revealed. Citywire meanwhile reports that Neil Woodford’s flagship Woodford Equity Income fund has trimmed its holding in the bailed-out lender.
Lloyds’ share price has been steady in London this morning, having inched 0.15 percent higher to 60.44p as of 09:22 BST. The shares are outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.43 percent higher at 7,425.86 points.
Berenberg hikes stance on Lloyds
Berenberg lifted its rating on Lloyds from ‘sell’ to ‘hold’ yesterday, while maintaining its price target on the shares at 60p. WebFG News quoted the analysts as commenting that the group’s darling status had largely faded and weaknesses inherent in the bank’s strategy, i.e. to focus narrowly on margins at the expense of risk-adjusted returns, were increasingly well-recognised.
“Risks remain, including from Brexit and from the Bank of England’s stress tests. However, with Lloyds’ shares down by circa 12 percent year-to-date, in line with large UK peers, the path to further absolute downside is less certain,” the broker pointed out.
Woodford trims stake in lender
In a separate development, Citywire reported that the Woodford Equity Income fund had been cutting its stake in Lloyds, which accounted for 3.4 percent of Equity Income fund at the end of last year but made up just one percent at the end of July. Woodford Investment Management argued that last month’s interim results had showed “continued strong execution from the business” but despite that, “we have been reducing the position [...] in order to take advantage of even more compelling valuation opportunities”.
Lloyds meanwhile is reportedly planning to reorganise its commercial bank and eliminate some senior management as it looks to trim costs.