HSBC share price: Goldman Sachs drops bank from ‘conviction buy’ list

on Mar 7, 2014
Updated: Apr 9, 2020
Listen Sunday, February 23: Goldman Sachs today removed (LON:HSBA) from its ‘conviction buy’ list and cut its price target on the stock from 900.00p to 740.00p. Shares in the bank lost only about 1.90p or 0.30 percent in the first half of today’s trading session.

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HSBC revealed last month that underlying profit before tax surged 41 percent in 2013 to $21.59 billion. The bank reported “weak operating trends” in the fourth quarter due to disappointing Global Banking & Markets revenue and slower growth in Asia and South America. Some analysts have also raised concerns over the accounting changes employed by HSBC for its stake in the Chinese lender, Bank of Communications, as well as the uncertainties around the adjustments related to compliance with capital requirements. As a result Goldman has lowered its profit before tax forecasts for 2014 to 2017 by about seven to nine percent and its earnings per share (EPS) estimates for the same period by 10 to 19 percent. The larger reductions in the EPS estimates indicate that Goldman expects a higher share count and no near-term share repurchases.

Goldman analysts wrote in a note to investors: “With regard to capital, uncertainties remain on what the final regulatory requirements for HSBC will be. In our view this is likely to push additional capital returns further into the future; capital build-up (rather than capital return) will pressure returns.”
**HSBC in $32 million settlement for insurance claims in the US**

HSBC Holdings and Wells Fargo have agreed to settle lawsuits with mortgage holders who claimed they were forced to pay for property insurance at inflated rates. HSBC will have to cough up as much as $32 million (₤19.1 million), according to a proposed agreement filed on February 28 in a US federal court.

HSBC Borrowers will be eligible to receive a refund of up to 13 percent of the premium billed, while Wells Fargo borrowers are entitled to 11 percent. The settlements are part of a larger effort by US banks to wrap up litigation and regulatory inquiries related to the subprime-mortgage meltdown.
**Analysts on HSBC**
BNP Paribas reaffirmed its ‘neutral’ rating on HSBC’s shares in a note to investors sent on Wednesday. It currently has a price target of 675.00p on the stock.
Four investment analysts rate HSBC as a ‘sell’, 16 give it a ‘hold’ rating and 17 are calling it a ‘buy’. The shares have a consensus rating of ‘hold’ and an average price target of 739.78p.
**As of 14.13 UTC buy HSBC shares at 623.90p.**
**As of 14.13 UTC sell HSBC shares at 623.70p.**


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