Analysts lower targets for StanChart after second profit warning this year

28th Oct 2014 09:35

Analysts at Numis Securities and Investec have cut their target prices for shares of Standard Chartered after the emerging markets-focused bank warned that second-half underlying profits would be below last year's.The stock fell sharply on Tuesday morning after StanChart issued its second profit warning this year after third-quarter pre-tax profits fell 16% to $1.5bn. In August, the company had predicted that underlying profits would improve in the second half.Numis has trimmed its target from 1,400p to 1,200p and downgraded its rating for the stock from 'add' to 'hold', saying it had reduced its forecasts for this year and was reviewing its forecasts for the next.Analyst Mike Trippitt highlighted "subdued income momentum and higher third-quarter impairments, a higher bank levy, plus regulatory and restructuring costs".He now expects StanChart to generate $5.81bn in pre-tax profit for 2014, 6% lower than his earlier $6.18bn forecast and below the $6.06bn reported in 2013.Meanwhile Investec analyst Ian Gordon lowered his target from 1,450p to 1,350p, but still recommended investors buy the stock.While costs and impairments were higher than expected, he said that StanChart had "encouragingly" delivered a slightly-better-than-expected revenue performance, with turnover up 1% year-on-year."We believe that the primary source of investor disappointment over the past 18 months has come on the revenue line [...] As such, we do not expect to be disappointed vis-à-vis our current forecast of a 3% H2/H2 revenue improvement," he said.StanChart's shares were down 9.2% at 944.5p by 09:55.