HSBC share price: Analysts see better dividend outlook

on Nov 8, 2016
Updated: Oct 21, 2019

HSBC Holdings (LON:HSBA) has raised its dividend outlook despite profits being down in the third quarter, analysts have said. The comments came after the blue-chip lender’s results came ahead of expectations yesterday.

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HSBC’s share price rallied in the previous session, adding 4.62 percent to close at 622.30p, and outperforming the broader market, with the benchmark FTSE 100 index soaring 113.64 points to close 1.70 percent higher at 6,806.90. The group’s shares have gained just under 18 percent over the past year.
The Share Centre retained its ‘buy’ recommendation on HSBC yesterday, pointing to the group’s results, arguing that while the bank’s reported profits were down in the third quarter, the adjusted pre-tax profits, which exclude one-off write-downs, had surpassed analyst consensus expectations and were higher than the same period last year.

“Investors should appreciate that costs continue to be cut and its capital cushion was beefed up, which could support dividends ahead and possible future share buybacks,” the broker’s analyst Graham Spooner commented, as quoted by Citywire, adding that income investors in the banking sector had “been hit hard in recent years”.
The analyst further noted that although progress at HSBC might continue to be slow in the face of many challenges, the shares could be a better option than other banks.

“We recommend HSBC as a ‘buy’ for contrarian investors, but would suggest investors build a holding over time as there is no quick fix for the sector,” Spooner concluded.
Barclays, which views the Asia-focused lender as an ‘equal weight’, boosted its price target on the stock from 550p to 600p today, while Deutsche Bank which sees HSBC as a ‘hold,’ lowered its valuation on the shares from 585p to 579p. Citigroup meanwhile lifted its stance on the FTSE 100 lender to ‘buy’, and raised its price target on the stock from 620p to 665p.
As of 08:07 GMT, Tuesday, 08 November, HSBC Holdings plc share price is 565.65p.


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