Lloyds share price: Pre-vote selloff seen as opportunity to bet on lender

on Jun 13, 2016
Updated: Mar 11, 2020

JPMorgan sees the uncertainty in the run-up to the EU referendum and the ongoing market selloff as an opportunity to bet on Lloyds Banking Group (LON:LLOY), the analysts have said. The comments come even as the bailed-out lender is expected to be among the hardest hit by a potential ‘Leave’ vote next Thursday.

Lloyds’ share price has fallen deep into the red in today’s session, having lost 2.98 percent to stand at 65.05p as of 12:11 BST. The shares are underperforming the benchmark FTSE 100 index which is currently 0.76 percent worse off at 6,069.29 points. The bank’s shares have lost over a quarter of their value over the past year, and are down 11 percent in the year-to-date.
Interactive Investor quoted analysts at JPMorgan as commenting today that they viewed “the elevated uncertainty due to UK’s EU referendum on 23 June as an opportunity to add to our top UK bank long-term pick Lloyds, which also remains our highest conviction UK idea into second-quarter results”.

“We see material downside risk for share prices in the event of a leave vote, but our base case is for an outcome of ‘Remain,’” the analysts pointed out. JPMorgan argues that Lloyds’ shares currently trade on 8.1 times earnings per share estimates for 2017 and a price/tangible net asset value (P/TNAV) of 1.1 times, noting that the lender also offers a prospective dividend yield of 8.9 percent for next year.
The comments come after analysts at Investec said last week that Lloyds was set to get a bounce if the UK votes to remain in the EU in the upcoming referendum on June 23. Analysts at Deutsche Bank also remain bullish on the bailed-out lender, reiterating their ‘buy’ rating on the stock today with a price target of 78p.
As of 13:54 BST, Monday, 13 June, Lloyds Banking Group share price is 65.03p.