Credit Suisse ups RBS target price but keeps 'underperform' rating

19th May 2014 09:09

Credit Suisse has lifted its target price for Royal Bank of Scotland (RBS) but has maintained an 'underperform' rating on the stock.The Swiss bank has raised its forecasts for underlying earnings per share from 11p to 14p for this year and from 15p to 17p for 2015, after lowering its estimates for impairments following RBS's first-quarter results earlier this month.Credit Suisse now expects RBS to record impairments of around £2bn in 2014, down from its previous £2.5bn estimate and closer to the group's guidance of £1.8-2bn provided with the first-quarter figures.The target price for the stock has been lifted from 265p to 280p, which also reflects an increased capital position, Credit Suisse said.However, it said: "Whilst we acknowledge that the strategic plan presented with full-year results will ultimately likely put the group back on a more sustainable path, we see current valuation as more than fully reflecting the 'steady state' return profile and not necessarily discounting execution risk or further litigation costs."The stock was 1.4% lower at 318.4p by 09:49.BC