Numis upgrades Lloyds to 'buy' after recent falls

1st Apr 2014 09:04

The recent weakness in Lloyds' shares has prompted Numis Securities to upgrade its rating on the stock to 'buy'.As of Monday's closing price, the stock had fallen 12.5% since hitting a 52-week closing high in mid-January. It has now dropped 5.6% over the past five days alone since the government sold a 7.78% stake in the lender.Numis pointed out that the bank's share price performance has been particularly weak since the government's share sale on March 26th and the stock now provides 30% upside to its 97p target price."We upgrade to buy' (from 'add') and highlight Lloyds Banking Group in our UK monthly 'top-picks' published today," said Analyst Mike Trippitt.He said that the bank has "powerful equity cash flow", helped by a recovery in attributable profit and low risk weighted asset growth. "We forecast equity cash-flow of 6.4p per share and a 2.0p dividend for 2014 (47% pay-out) increasing to 2.5p and 3.1p in 2015 and 2016."The broker estimates that Lloyds' fully loaded core tier-1 capital ratio will rise from 10% at the end of 2013 to 11.2% in 2014 and 11.7% in 2015.The stock was 1.1% higher at 75.49p by 09:21.BC