ShoreCap says NatWest entering fair value territory, downgrades

Shore Capital downgraded NatWest on Monday to ‘hold’ from ‘buy’ as it said the shares were "entering fair value territory".

The broker noted that NatWest shares are up 46% year-to-date, significantly outperforming the FTSE All-Share Index up 8% and FTSE All-Share Banks Index up 18%.

"This has occurred despite the government reducing its shareholding from around 38% at the start of the year to circa 27% today, with more to come by way of a directed share buyback and possible discounted retail placing," it said.

"As a result of the re-rating, the stock is now trading at a slight premium to TNAV, while the upside to our 350p fair value is now just 9%.

"Consequently, we downgrade our recommendation to hold (from buy)."