Berenberg raises target price on Standard Chartered

Analysts at Berenberg raised their target price on multinational bank Standard Chartered from 1,050.0p to 1,100.0p on Friday after the group's Q1 earnings "validated" management's suggestion that the bank had experienced "an encouraging start" to the year.

Berenberg, which has a 'buy' rating on the stock, noted that underlying trends within the business also increased its confidence in the bank's ability to grow revenues year-on-year throughout FY24 and beyond.

Following actions to substantially hedge interest rate risk, the German bank also believes that the sustainability of Standard Chartered's revenues and growth remains poorly appreciated.

"Indeed, lower interest rates may create additional cyclical support. While the shares rose by circa 9% following the Q1 2024 results on 2 May, the bank's 0.6x TBV valuation poorly reflects our FY 2026E RoTE of 12% (in line with guidance). Our new 1,100.0p price target implies circa 50% upside," said Berenberg.

"Our underlying EPS for Standard Chartered increases by 3-5%. We now expect a 12% FY 2026E RoTE and an annual total yield (dividends plus buybacks) of c10-11%. These returns, and Standard Chartered's growth, are poorly reflected in the share price, trading on 0.6x TBV. Our 1,100.0p price target (up from 1,050.0p) values the bank on 0.9x TBV and implies 50% upside."

Reporting by Iain Gilbert at Sharecast.com