Berenberg downgrades HSBC to 'sell', deems forecasts 'unrealistic'
Analysts at Berenberg sounded a critical note on HSBC's strategic plans, telling clients they were "poorly-timed" and "unrealistic".
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"Considering trade and political tensions in HSBC’s key markets, volume growth of c4% needed to meet consensus given rate headwinds is unrealistic, in our view," they said in a research note dated 4 November but published on the next day.
And those same tensions could "reveal weaknesses in HSBC's broader network".
Furthermore, whereas in their opinion HSBC's recent growth had relied cyclical tailwinds, lower interest rates would create a "material" headwind.
"While restructuring HSBC’s low-returning businesses could offset this, we believe apparent benefits may prove illusory. Considering these headwinds and risks, we believe HSBC’s 40% P/E premium to the sector is unwarranted," they added.
Analyst Peter Richardson downgraded his recommendation for the shares from 'hold' to 'sell' and slashed his target price from 700.0p to 490.0p.