This Week’s Trading Updates: Broker and Tipster Sentiment 26th October 2018
This is a guest market report by James Bowden, Stockomendation Analyst.
WEEKLY TIP INSIGHT: 26h OCTOBER 2018
“Trading updates spur tipster focus on the banking sector”
Despite a series of strong earnings announcements, it’s been a disappointing few months for holders of London-listed bank shares. Tip activity spiked in the banking sector this week, spurred on by third quarter results announced by Lloyds Banking Group (LLOY) and Barclays (BARC) in recent days. This week, we take a look at recent tip activity in the sector, and see how tipster sentiment towards banking firms currently differs from brokers.
Lloyds hit the news earlier this week when it announced a strategic joint venture with Schroders (SDR) – ranking amongst the largest ever wealth management alliances – and followed that up by beating forecasts in its interim results on Thursday. Whereas the news was received well by brokers – all five brokers reiterated buy ratings on Lloyds’ shares – tipsters remained much less optimistic.
Richard Evans (The Telegraph) advised readers to hold, noting that “every important number reflected continued improvement”. However, both GA Chester (The Motley Fool) and Katherine Griffiths (The Times) warned readers to avoid, with the latter concerned about its “limited ways to boost growth” now that it has resolved the “big problems of the past decade”. Chris Bailey (ShareProphets) reiterated his earlier recommendation of buying “with the hope of a 70p share price and a bit of dividend income to boot by some next year”.
Shares in Barclays are currently hovering over 3.5% higher than they closed last week, after it announced third quarter results on Wednesday. Pre-tax profits dropped from £3.5bn to £3.1bn compared to the same period last year, but this was impacted by over £2bn in fines and charges. Similar to Lloyds, five brokers covering the shares all issued buy ratings, while tipsters were more concerned. Roland Head (The Motley Fool) is bullish, finding that “using most common measures of value, Barclays shares look attractive”. Kevin Godbold (The Motley Fool) however disagrees, citing “more downside risk than upside potential with the big London-listed bank shares”.
The top performers in the sector this month came from broker recommendations on Secure Trust Bank (STB). A third quarter trading update on 17th October led to buy ratings from Canaccord Genuity, Peel Hunt and Shore Capital; all three have achieved performances of nearly 5%. In contrast, CYBG’s (CYBG) recent woes have seen ‘hold’ ratings made towards the company’s shares produce negative performance of over -17%.
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Disclaimer: The contents of this article should not be considered financial advice. Returns used in this analysis are expressed as price returns. All information displayed as at 26th October 2018.
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The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.