HSBC Holdings (HSBC – Research Report), the Financial sector company, was revisited by a Wall Street analyst yesterday. Analyst Peter Richardson from Berenberg Bank maintained a Buy rating on the stock and has a p830.00 price target.
Peter Richardson has given his Buy rating due to a combination of factors that position HSBC Holdings in a favorable light. The first quarter results of 2024 for HSBC surpassed the consensus estimates by 11%, indicating a robust performance across various financial metrics. The bank’s net interest income showcased a particularly strong outcome, reassuring investors after previous concerns about HSBC’s guidance. Additionally, the bank’s Wealth business experienced a positive trend, and the increase in the quarterly buyback to USD 3 billion further supports the optimistic view. With HSBC trading at 1.0x tangible book value, Richardson believes the bank’s sustainable return on tangible equity of approximately 14% and its potential for long-term growth and capital returns are currently underappreciated by the market.
Furthermore, Richardson’s confidence is bolstered by HSBC’s Q1 2024 Wealth fees, which have seen a year-over-year increase of 14%, driven by significant growth in Private Banking and Investment Distribution. The bank’s underlying expenses, although slightly above its own forecast, were still better than market expectations. Moreover, HSBC’s disciplined approach to asset disposals, such as the sale of its Canadian business leading to a special dividend, reflects a strategy that Richardson views as beneficial for shareholders. He forecasts a compelling ordinary dividend yield and substantial annual buybacks. Given these dynamics, the analyst contends that HSBC’s valuation does not fully reflect its strong return on tangible equity, justifying an increased price target and the Buy rating.
Richardson covers the Financial sector, focusing on stocks such as NatWest Group, Close Brothers Group, and Barclays. According to TipRanks, Richardson has an average return of 6.1% and a 58.64% success rate on recommended stocks.
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HSBC Holdings (HSBC) Company Description:
Founded in 1865, UK-based HSBC Holdings Plc provides banking and financial services. It is the largest bank in Europe and the sixth largest bank in the world by 2020. It operates through the following business segments: Retail Banking and Wealth Management, Commercial Banking, Global Banking and Markets, and Global Private Banking.
