Investec upgrades StanChart on weak year-to-date performance

Investec upgraded Standard Chartered to ‘buy’ from ‘hold’, with the stock trading at a fresh 21st century low of 387p.

The brokerage said it was little surprise StanChart has been almost the worst performing UK bank year-to-date, given the way 2016 has played out so far.

Investec said StanChart’s path back to “normalised” returns remains long and deeply uncertain.

“Aside from its disproportionate ($43.2bn) commodities-related exposure, with adverse implications for revenues and impairments, the blow-out in CDS spreads and yields for AT1 securities has implications for its intended $4bn of further AT1 issuance.”

The brokerage prefers Aldermore and Virgin Money, both of which it rates at ‘buy’.

Investec cut its price target on the stock to 460p from 550p and pointed out that its forecasts for 2015 numbers remain below consensus by a considerable margin.

The brokerage’s earnings per share forecasts of 2c, 6c and 51c for 2015-17e are now 77%, 15% and 34% below Bloomberg consensus of 8c, 7c and 77c through 2015-17.

Standard Chartered's full year 2015 results are due on 23 February.

At 1445 GMT, StanChart shares were up 8.3% to 418.75p.