Lloyds share price surges as Jefferies hikes valuation

on Feb 1, 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, outperforming the broader market, as analysts at Jefferies hiked their price target on the stock, arguing that the market is too bearish on the lender’s earnings prospects. The upbeat comments come ahead of the bailed-out bank’s full-year results on February 22.

As of 13:26 GMT, Lloyds’ share price had climbed 1.40 percent to 65.84p, outperforming the benchmark FTSE 100 index which currently stands 0.68 percent higher at 7,147.24 points. The group’s shares have added a little over two percent over the past year, and are up by some five percent in the year-to-date.
Jefferies, which is bullish on Lloyds with a ‘buy’ rating, lifted its valuation on the shares from 67p to 82p today. Proactive Investors quoted the analysts as saying that rather than margins on lending dipping, they saw a small rise next year, while bad debt ratios may also be much better than forecasts. Another bull point is the merger benefit between Lloyds’ consumer finance arm and MBNA UK.

The FTSE 100 lender inked a £1.9-billion deal to buy the business in December, forecasting that the acquisition will deliver an underlying return on investment exceeding cost of equity in the first full year and increases to about 17 percent in the second full year after the tie-up is completed. The deal is further expected to add £650 million a year to group revenues.
Shore Capital also remains bullish on Lloyds, having reiterated its ‘buy’ rating on the stock yesterday, without specifying a valuation on the shares. Goldman Sachs, which sees the bailed-out lender as a ‘sell,’ meanwhile set a price target of 60p on the stock.
As of 13:49 GMT, Wednesday, 01 February, Lloyds Banking Group share price is 65.82p.

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