Lloyds share price: Goldman Sachs lifts rating on lender

Goldman Sachs has hiked its rating and price target on Lloyds Banking Group (LON:LLOY), arguing that tail risks for the bailed-out lender are receding, Sharecast reports. The move comes in the wake of the London-listed group’s full-year results last month when the company  unveiled plans to spend £4 billion on dividends and a share buyback.

Lloyds’ share price rose in the previous session, gaining 0.89 percent to close at 62.34p, outperforming the broader UK market, with the benchmark FTSE 100 index adding 20.53 points to close 0.29 percent higher at 7,151.15. The lender’s shares have lost more than seven percent of their value over the past year, as compared with less than a one-percent drop in the Footsie.

Goldman Sachs lifts stance on Lloyds

Goldman Sachs lifted its rating on Lloyds from ‘sell’ to ‘neutral’ yesterday, lifting its price target on the shares from 57p to 66p. Sharecast quoted the analysts as commenting that its ‘sell’ thesis was predicated on its assumption that ring-fencing would result in lower mortgage pricing and thus adversely impact the group’s profitability.

“While mortgage pricing has fallen markedly since, Lloyds has been able to offset this through consequent deposit repricing, changes in loan book mix and increases in the structural hedge,” the broker continued, adding that two base rate hikes had also helped and that, “together with benign asset quality trends resulted in Lloyds outperforming our banks coverage”.

Other analysts on bailed-out lender

Barclays reaffirmed Lloyds as an ‘overweight’ this week, without specifying a price target on the shares, while Credit Suisse, which sees the company as an ‘outperform,’ lowered its valuation on the stock from 84p to 83p earlier this month. According to MarketBeat, the blue-chip group currently has a consensus ‘buy’ rating and an average price target of 73p.

As of 08:19 GMT, Wednesday, 13 March, Lloyds Banking Group share price is 62.34p.