Nomura sees RBS as oversold short-term, however

7th Nov 2011 16:45

In a research note published today analysts at Nomura say that shares of Royal Bank of Scotland are oversold when looking at the short-term. On a more medium-term basis however these analysts are of the opinion that any rebound is likely to be a rally rather than a long-term trend. The reason for the above is that while its results contained no negative surprises and, in fact, contained some positive news in so far as the bank reaffirmed its longer term balance sheet targets, Nomura now sees group profits remaining below trend for at least the next two years, due to Ulster and losses in non-core activities. Thus, at circa 0.45 times its tangible book value Nomura believes that RBS shares already discount a lot of negative news. Nonetheless, it considers the group's prospects as being, "uncertain and vulnerable to downturns in the economy and financial markets."Nomura has a 'neutral' recommendation on Royal Bank of Scotland and a price target of 34p.