Credit Suisse sees big Barclays rerating, neutral on Lloyds and HSBC

29th Nov 2016 10:02

(ShareCast News) - Credit Suisse initiated coverage on a number of UK banks on Tuesday, as it noted the regulatory agenda is heating up, starting with the stress test results on Wednesday, for which it reckons banks are "reasonably well placed".It started Barclays at 'outperform' with a 260p price target, saying it presents the most significant re-rating potential as visibility on group return on tangible equity improves and the restructuring benefit to the common equity tier 1 is better understood.CS said it is 14% and 20% ahead of consensus in terms of its profit before tax estimate for FY17 and FY18, respectively, reflecting a strong third quarter performance and a less severe deterioration in Barclays UK.CS initiated Standard Chartered and RBS at outperform with 515p and 180p price targets, respectively.It said StanChart's valuation assumes an 8% return on equity is possible despite the need to grow the top line 20%. "We expect continued EPS downgrades to weigh on the shares."On RBS, it said: "The number of downside risks to EPS and capital (plus the significant share overhang) places this as a relative underperform."Credit Suisse started Lloyds Banking Group and HSBC at 'neutral' with price targets of 65p and 600p, respectively.It said for Lloyds, worries about Brexit are overdone but a significant re-rating is unlikely without a material surprise on dividend per share.It noted Lloyds shares fell 36% to under 48p in the weeks after the Brexit vote and have since recovered to -18%, broadly in line with RBS.As far as HSBC is concerned, it said the stock has outperformed Lloyds by 57% since the EU referendum and is now fully valued.At 1013 GMT, Barclays was up 1.4% to 214.95p, StanChart was down 0.1% to 629.10p, RBS was down 1% to 194.30p, Lloyds was down 0.5% to 57.56 and HSBC was flat at 632.50p.