Lloyds share price: Deutsche Bank points to limited upside

on Jan 16, 2017
Updated: Oct 21, 2019
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Deutsche Bank continues to see Lloyds Banking Group (LON:LLOY) as a ‘neutral,’ arguing that there is limited potential upside to the shares which are trading close to their fair value. Macquarie meanwhile has struck a more upbeat note, saying that the bailed-out lender is one of its ‘top buys’.

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Lloyds’ share price has fallen deep into the red alongside other London-listed lenders, pressured by concerns about a potential ‘hard Brexit’. As of 12.59 GMT, the shares were changing hands 1.48 percent lower at 65.06p, underperforming the benchmark FTSE 100 index which currently stands at 7,338.12 points, flat in percentage terms.
Deutsche Bank continues to see Lloyds as a ‘neutral’, saying that while things at the bailed-out lender are better than expected, there is still too little reason to buy the shares.

“With the purchase of MBNA Lloyds has bought balance sheet, EPS & margin growth,” the broker’s analyst David Lock said, as quoted by Proactive Investors, adding that this, combined with continued better-than-expected credit quality in the wake of Brexit, means that Deutsche Bank’s EPS forecasts rise. Lock, however, notes that the shares are already trading close to their fair value.
The analyst further highlighted possible factors for ‘upside risks’ such as an improving economy, better margin and credit quality, while regulation, loan losses and market uncertainty are seen as factors for ‘downside risks’.

Analysts at Macquarie meanwhile continue to see Lloyds as an ‘outperform’. Sharecast quoted the broker as noting that its estimate of impairments this year was 25 percent below consensus.
The 21 analysts offering 12-month price targets for Lloyds for the Financial Times have a median target of 67.00p on the shares, with a high estimate of 93.00p and a low estimate of 40.00p. As of January 14, the consensus forecast amongst 28 polled investment analysts covering the bailed-out lender advises investors to hold their position in the company.
As of 13:40 GMT, Monday, 16 January, Lloyds Banking Group share price is 65.05p.

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