BROKER FORECASTS
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Broker views: Snippets from the UK banking sector

11th August 2017, 15:10

Equity research analysts at HSBC have upgraded their investment rating on Royal Bank of Scotland [LON:RBS] to hold from reduce saying that, while the valuation is full, they see only modest downside.

The bank said: "RBS has executed well on its medium-term plan, but some factors lie outside management control.

"In particular, we caution that consensus appears too sanguine on the magnitude of the likely DoJ settlement."

Target lifted to 250 pence per share (from 210 pence), implying 3.5% potential downside, with the shares starting the day at 259 pence apiece.

Meanwhile, Numis upgraded its recommendation on Challenger bank Aldermore [LON:ALD] to add (from hold) believing the shares are "too cheap, even if you are cautious", pointing out that the stock is being valued at just 9.5x its bottom of the cycle forecast earnings.

The broker added: "We do not see a more material recession as our key trading partners continue to perform relatively well and we see this recession as a UK specific outcome.

"We expect Aldermore to partly offset the expected increase in impairment through further cost efficiencies."

Analysts have upped their target price to 262 pence a share (from 233 pence).

Earnings per share forecasts for fiscal year 2017 have been trimmed by 2.3% to 30.2 pence (from 30.9 pence) but increased by 1.8% to 23.2 pence (from 22.8 pence) for 2018.




At 3:10pm:

[LON:ALD] Aldermore Group PLC share price was -8.05p at 215.95p

[LON:RBS] Royal Bank of Scotland Group The PLC share price was -1p at 257.2p
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