RBS shares too expensive after poor results, says Investec

26th Feb 2015 09:44

Investec has retained a 'sell' rating on RBS after 2014 results from the UK banking group missed market forecasts, saying that the stock's valuation was too expensive.The company reported an attributable loss of £3.5bn for 2014, more than half the £9.0bn suffered in 2013.However, for the fourth quarter alone, losses totalled £5.8bn as a result of a near-£4.0bn fair value write-down for its US arm Citizens."Excluding this, a £1.9bn loss compares with Investec's forecast loss of £0.1bn and the consensus expectation of a £0.1bn profit," said analyst Ian Gordon."RBS has now achieved a seventh successive year of heavy reported losses (2008-2014 inclusive) and we expect only a 'breakeven' performance in 2015," he said.Gordon said it is "unrealistic" that the company can achieve a return on equity of over 10% before 2019."As such, without dividend support, and given the continuing overhang of 79% UK government ownership, we cannot rationalise RBS continuing to trade on over 1.0 times 2014 tangible net asset value (387p)."The broker has a 380p target price for the stock, which was down 2.8% at 392.1p by 10:19.