Broker tips: HSBC, Sage, Evraz

Goldman Sachs lifted its target price on shares of HSBC, highlighting the lender's stable net interest income in the States and the potential for it to return capital to shareholders now.

Markets were likely to focus on the lender's better-than-expected revenues and capital formation, with its common equity Tier 1 ratio having been boosted by 70 basis points quarter-on-quarter to 14.3%, Goldman said.

The latter was well ahead of the 13.7% reading markets had anticipated with 40 basis points-worth of that attributable to better collateral netting and other movements.

"With HSBC now significantly above its c.13% CET 1 target range, we believe investor focus will be on what implications this could have for capital return potential. All-in, we expect a positive share price reaction," analysts Martin Leitgeb, Nick Baker, Sean Nordquist and Gurpreet Singh Sahi said in a research note sent to clients immediately following the results.

Following on from the above they bumped up their target price on the shares from 725.0p to 740.0p while reiterating a 'Neutral' stance.

Analysts at VTB Capital reiterated a 'Buy' recommendation on shares of Evraz following the sale of its Nakhodka Trade Sea Port subsidiary which, they said, may give the steel-maker the financial power to pay dividends.

Dmitry Glushakov, Boris Sinitsyn and Nikanor Khalin highlighted how the $354.4m finally paid for the assets by the company's largest shareholder, Lanebrook Lmtd. was above the $260.0m which had been bandied about in the Russian press and being 18% above Evraz's current 2018 price-to-earnings multiple of 5.6 was "fair".

Net proceeds from the transaction of $295m equate to 6% of its year-end 2016 net debt and 7.8% of its market capitalisation, which in turn raises the possibility that it will be able to lower its net debt to EBITDA ratio below 2.0 by the end of the first half of 2017.

Analysts at JP Morgan bumped up their target price for shares of Sage on account of the solid trading already evident in the second quarter and the confident note struck by management alongside the company's interims.

The business software developer said sales had already begun accelerating in the second quarter, reaching a clip of 6.3%, with management "very confident" in its ability to exceed its full-year guidance for revenues to rise 6% (including the US payments business).

They also expect operating margins to exceed 27%.

Furthermore, the decision to discontinue the US payments business will remove one of the drags on growth, the broker said, and potentially bring in cash.