HSBC share price analysis and earnings preview: buy or sell?

HSBC share price has held steady in the past few years, mirroring the performance of other top European banks. It was trading at 1,282p on Wednesday, up sharply from last year's low of 683p. This surge has brought its market capitalization to over $297 billion, making it the biggest European bank.

HSBC share price in focus ahead of earnings 

HSBC, one of the biggest banks globally, has done well in the past few years as the management has implemented a major turnaround effort.

A key part of this turnaround is that it has exited key international markets as it boosted its focus on the Chinese market, where it is seeking to become a major player in the wealth management industry.

The company has exited key markets like the United States, Canada, France, Argentina, and South Africa. By exiting these markets, the company boosted its focus on its most profitable markets, especially in China, a country that continues to mint many millionaires and billionaires.

As part of this growth, HSBC announced its Hang Seng Bank, a major company with a major market share in Hong Kong.

The company has also embarked on a cost-cutting process, with the goal of cutting between $1.5 billion and $1.8 billion last year. Its goal is to become both a growth and a profit-oriented company.

Looking ahead, the next major catalyst for the HSBC stock price will be its financial results on February 25. 

The most recent results showed that its profit before tax was $7.3 billion in the third quarter, down by $1.2 billion from the same period a year earlier. This slowdown was mostly because of operating expenses, including a $1.4 billion legal provision. The legal provision was related to the Madoff securities fraud.

The results showed that the company's revenue rose by 5% to $17.8 billion, with its internal wealth and premier banking business continuing its strong trajectory.

Analysts believe that the upcoming results will show that HSBC’s annual revenue rose to between $68.75 billion and $69.13 billion, with its EPS growing by 6.9% to between $6.66 and $7.12. The company will likely publish stronger-than-expected financial results.

HSBC has also done well because of its dividends. It has a dividend yield of 3.81% and a payout ratio of 50%.

HSBC stock price technical analysis 

The weekly timeframe chart shows that the HSBC stock price has been in a strong uptrend in the past few years, moving from a low of 206p in September 2020 to the current 1,290pm

The stock has remained much higher than the 50-week and 100-week Exponential Moving Averages (EMA), a sign that bulls remain in control. 

While this is a good thing, it also places it at a risk of mean reversion, a situation where an asset moves back to the historical averages.

The Relative Strength Index (RSI) has continued rising and is now hovering at the overbought level. Also, the Percentage Price Oscillator (PPO) has remained above the zero line since January 2023.

Therefore, the most likely scenario is where the HSBC stock price continues rising, potentially to the key resistance level at 1,500p. 

The risk, however, is where the stock retreats and retests the psychological level at 1,000p.