Lloyds share price rises as Barclays turns bullish on bailed-out lender

on Jan 6, 2017
Updated: Oct 21, 2019
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Shares in Lloyds Banking Group (LON:LLOY) have jumped more than one percent in London in today’s session, after analysts at Barclays turned bullish on the stock. The broker argues that returns at the bailed-out lender are supported by the planned MBNA acquisition and an improved net interest margin outlook.

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As of 12:15 GMT, Lloyds’ share price had gained 1.68 percent to 65.74p, outperforming the benchmark FTSE 100 index which has slipped marginally into the red and is currently 0.09 percent worse off at 7,188.72 points. The group’s shares have lost more than seven percent of their value over the past year, as compared with about an 18-percent rise in the Footsie.
Barclays lifted its stance on Lloyds from ‘equal weight’ to ‘overweight’ today, and raised its price target on the shares from 55p to 75p.

“We see Lloyds making a consistent around 13 percent return on tangible equity over the next three years and returning almost a quarter of its market cap to shareholders, which suggests to us that the shares are undervalued at 1.2x tangible net asset value and 9.1x 2017E earnings,” the analysts pointed out, as quoted by Sharecast, adding that margin prospects looked positive on account of higher medium-term rates, the limited likelihood of further base rate cuts, as well as the planned acquisition of MBNA’s UK credit card book which Lloyds unveiled last month.

The analysts further pointed out that the UK government’s plan to sell down its remaining shareholding in Lloyds seemed to be progressing at a good pace without much impact on the share price.
The 21 analysts offering 12-month price targets for Lloyds for the Financial Times have a median target of 65.00p on the shares, with a high estimate of 93.00p and a low estimate of 40.00p. As of January 5, the consensus forecast amongst 28 polled investment analysts covering the bailed-out lender advises investors to hold their position in the company.
As of 12:31 GMT, Friday, 06 January, Lloyds Banking Group share price is 65.76p.

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