Investec downgrades RBS to 'sell'

1st Aug 2014 11:31

Investors should 'sell' shares of Royal Bank of Scotland following the bank's second-quarter results on Friday, according to Investec.The broker highlighted that RBS pre-released a better-than-expected set of second-quarter numbers last week, which sparked "wild euphoria and an 11% one-day spike"."Despite already giving back part of those gains, with the stock still trading on one times 2014/2015 estimated tangible net asset value we believe that investors should again feel able to short the stock with confidence," said analyst Ian Gordon.He endorsed chief executive Ross McEwan's "visionary, long-term strategy for recovery", but said that market sentiment has "got ahead of financial reality".RBS should see negative earnings trends through the third and fourth quarters of 2014 and "anaemic returns" through 2014 to 2017, Gordon predicts."If accurate, then a further correction appears due. Downgrade to 'sell'," he said.The broker has lifted its target price for the shares from 325p to 340p.The stock was down 2.4% at 346.9p by 11:31.BC