Standard Chartered share price: Citi lowers target on bank’s stock

Citi analysts yesterday lowered their target price on Standard Chartered Plc’s (LON:STAN) stock, citing low valuation and high correlation between the lender’s share price and that of crude oil.

The broker found StanChart’s valuation, 0.5 times estimated 2016 price-to-tangible book value, to be “low” in the context of global banks and also noted that the lender was a proxy for emerging market and commodities exposure.
“We expect the 2H15 restructuring and ongoing uncertain Asian/EM macro environment to create revenue pressure in 2H15-16,” the analysts said in a note to clients. “STAN’s commodity exposure at 3Q15 is circa 100% of 2015E tangible book,” they added.

Citi maintained its “neutral” rating on StanChart’s shares and cut the price target on the stock to 465p from 615p. The broker’s target for the shares of StanChart’s Hong Kong-listed unit was lowered to HK$52 from HK$72.
StanChart has also received some positive analyst comments in recent weeks. Last month, the bank earned a “buy” rating from Berenberg, which highlighted the strategy shift taking place at the troubled lender under its new CEO, Bill Winters.
““Recent events mean that Standard Chartered has the three catalysts in place to change – a core business to focus on, enough capital to afford change and external management,” Berenberg analyst James Chappel,” said in a research note in mid-January.
Meanwhile, Standard Chartered’s share price has recovered some ground today following a couple of disastrous trading sessions earlier this week. In today’s trading, Standard Chartered shares were up 3.9 percent at 430.45p, as of 15:09 GMT. The stock has fallen 23.7 percent since the start of the year and the company’s market capitalisation currently stands at £14.8 billion.
As of January 30, 2016, the consensus forecast amongst 25 polled investment analysts covering Standard Chartered had it that investors should hold their position in the company. The same consensus estimate has been maintained since May 08, 2013, when the sentiment of investment analysts deteriorated from “hold”.
As of 15:53 GMT, Thursday, 04 February, Standard Chartered PLC share price is 434.63p.