RBC Capital Markets raises target price on Lloyds Banking Group
Lloyds Banking Group
55.34p
16:40 07/01/25
Analysts at RBC Capital Markets raised their target price on retail bank Lloyds Banking Group from 51.0p to 54.0p on Monday. Following the company's third-quarter results.
Banks
4,893.75
17:14 07/01/25
FTSE 100
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17:14 07/01/25
FTSE 350
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17:14 07/01/25
FTSE All-Share
4,493.46
16:44 07/01/25
RBC stated it had increased 2023 pre-tax profits estimates for Lloyds by 6%, driven by an increase in its net interest income estimates due to higher rate expectations. However, it did also note that this would be "partially offset" by lower operating income following the implementation of IFRS17 in 2023.
The Canadian bank noted that its numbers now see it assuming that Lloyds will announce a restructuring programme alongside its 2021 strategy update and led it to include £1.5bn and £1.0bn in its model for restructuring in 2022 and 2023, respectively.
RBC, which reiterated its 'outperform' rating on the stock, highlighted that it was now roughly 10% above consensus on a pre-tax profit level with its 2023 estimates and approximately 20% above consensus on three-year total shareholder returns.
"We value LLOY with a DDM on our 2023 estimates. This results in a 54.0p fair value for the shares discounted to end-2021 using an 11% cost of equity," said RBC.