Investec's Ian Gordon downgrades StanChart to 'sell'

Analysts at Investec took their recommendation on shares of StanChart down from 'hold' to 'sell', telling clients the outlook for earnings per share and return on capital are now less convincing.

"Indeed, we find that the "Q1 conversation" tends to take place around the PBT line. We see the prospects for EPS/ROTE progression as much less convincing. Downgrade to Sell (from Hold)."

The broker's Ian Gordon did nevertheless bump up his target price on the shares of the lender from 685.0p to 690.0p.

In his opinion, markets had again suceeded in working themselves into a froth ahead of time, sending the shares higher as it published results at the end of April.

The hard facts were still all too clear the analyst said, after two years of losses StanChart was still not paying a dividend and would not achieve a 10.0% return on tangible equity before 2021.

Nonetheless, he remained cautiously optimistic on the lender's longer-term strategic repositioning.

Gordon referenced remarks from Ana Marrs, the CEO of StanChart's Commercial and Private Banking unit in that regard.

In an interview with Bloomberg she said: "we know that it is a long-term build [...] getting a return above your cost of equity is still possible".

"We concur", Gordon said.