HSBC share price: Jefferies starts lender at ‘buy’

Jefferies has kicked off coverage of HSBC Holdings (LON:HSBA) with a ‘buy’ rating, flagging higher revenues at the Asia-focused lender following years of disappointment. The analysts have also forecast higher capital returns next year.

HSBC’s share price has slipped into the red in London in today’s session, having shed 0.36 percent to 742.33p as of 13:08 BST. The stock is slightly underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.03 percent lower at 7,409.36 points. The group’s shares have added more than 27 percent to their value over the past year, and are up by about 13 percent in the year-to-date.

Jefferies initiated coverage of HSBC with a ‘buy’ rating yesterday, and a price target of 920p on the shares.

“HSBC has re-engaged in balance sheet growth, which should drive revenues higher after disappointing for seven years,” the broker’s analyst Joseph Dickerson commented, as quoted by Citywire, further forecasting higher capital returns next year, with a number of headwinds, including disposals, currency movements, and a deferred prosecution agreement in the US, set to subside.

The comments come after HSBC updated investors on its interim performance in July, posting a five-percent rise in interim profits and unveiling plans for a $2-billion share buyback in the second half of the year, having wrapped up a previously announced $1-billion buyback in April.

Jefferies’ Dickerson further noted that HSBC’ balance sheet growth should drive a three-percent revenue compound annual growth rate over the next two years. 

Citigroup also remains bullish on HSBC, having reiterated its ‘buy’ rating on the stock at the end of last month, valuing the shares at 850p. According to MarketBeat, Europe’s biggest bank currently has a consensus ‘hold’ rating and an average price target of 692.15p. 

As of 13:40 BST, Tuesday, 05 September, HSBC Holdings plc share price is 740.50p.