Investec upgrades Lloyds after recent falls

24th Mar 2014 09:38

Investec has upgraded its rating for Lloyds Banking Group from 'hold' to 'buy', telling investors that "it is safe to go back in the water".The broker had downgraded Lloyds to 'hold' back in January citing five main concerns: "frothy" sellside forecasts for 2013; PPI top-up risks; enhanced capital note (ECN) unwind; other income decline; and government overhang."The first four have now been addressed, and we are less afraid of [government overhang] at this level, equal to the 77.4p mark at which the UK government launched an initial 6% sell-down on September 16th 2013," said Analyst Ian Gordon."After a 10% 10-week pull-back, we again see reasonable value for a low-risk stock. Upgrade to 'buy'," he said.Gordon said that Lloyds trades at 1.5 times estimated 2014 tangible net asset value but that comes alongside resurgent 'core' growth and recovering earnings.He left his target price for the shares at 85p.Lloyds was trading 1.4% higher at 78.47p by 09:51 on Monday.BC