Lloyds share price: Barclays upbeat on bank amid capital return prospects

on May 3, 2017
Updated: Oct 21, 2019

Barclays remains bullish on Lloyds Banking Group (LON:LLOY), arguing that the lender could return roughly a quarter of its market capitalisation to shareholders. The upbeat comments come after Lloyds updated investors on its first-quarter performance last week, posting a surge in profits.

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Lloyds’ share price closed at 69.20p yesterday, down 0.05 percent for the session, and continuing to trade blow the taxpayer’s break-even price of 73.6p. The group’s shares have added more than three percent to their value over the past year, and are up by some 10 percent in the year-to-date.
Barclays reiterated its ‘overweight’ stance on Lloyds yesterday, lifting its price target on the shares to 77.0p. Analysts at the broker laud the bailed-out bank’s positive surprises on both net interest margins (NIM) and lower provision charges in its first-quarter results, while noting that the latter might not be sustained.

The stronger NIM, however, looks ‘stickier’ with additional reductions in Lloyds liability costs expected to largely offset asset pricing pressure, Barclays explained, as quoted by Sharecast, adding that this is what will allow the group to return about 25 percent of its current market capitalisation to shareholders over the coming three years.
The analysts further noted that sporting a 2017 price-to-earnings (on an underlying basis) multiple of 8.9, trading on a tangible book value of 1.3 and with a dividend yield of between seven percent and nine percent, Lloyds shares are ‘attractive’.
“Together with our 5p dividend forecast this offers a 19-percent total shareholder return over the next 12 months,” Barclays pointed out.
The 23 analysts offering 12-month price targets for Lloyds for the Financial Times have a median target of 75.00p on the shares, with a high estimate of 100.00p and a low estimate of 40.00p. As of April 28, the consensus forecast amongst 28 polled investment analysts covering the blue-chip lender has it that the company will outperform the market.
As of 07:56 BST, Wednesday, 03 May, Lloyds Banking Group share price is 69.16p.


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