Broker snap: Lower long-term growth at HSBC, says UBS

15th Jun 2011 12:01

UBS cuts its target price for HSBC by 7%, from 708p to 655p, based on expectations of lower long-term growth for the global banking giant."We believe implicit in its goals are healthy EPS [earnings per share] growth and faster dividend growth. However, with news likely on these in March 2013, we have an age (in stock market terms) to wait," the broker said.UBS is reducing its revenue forecasts, but - "as the business becomes less credit intensive and we expect more disciplined cost control" - EPS downgrades are only modest.The broker notes that its forecasts do not include disposals. "Were HSBC to sell its US cards and upstate New York banking businesses, these would likely leave a $7bn revenue hole, depressing growth."A 'neutral' stance is retained.---BC