Is it irrelevant, or will the Upgrade make the Royal Bank of Scotland share price more attractive?

• The chart shows the Royal Bank of Scotland share price since the beginning of 2018.
• Macquarie upgrades Royal Bank of Scotland to Outperform, raising the target price to 292p (from 265p).
• Consensus summary: 17 Buys, 8 Holds, 0 Sell; Average target: 306p (Source: Bloomberg).
• Current share price 248p (at time of writing).
• September UK mortgage lending figures beat expectations, with £3.89bn (65.2K mortgages) taken, beating consensus of £3bn (64.75K).
• UK Index ‘s Banking sector is benefiting from the strong mortgage market in spite of Brexit uncertainty.
• Shares -19.5% from 2018 highs; +11% from 2018 lows; -10.6% year-to date
• Source: Bloomberg, FT, Reuters, DJ Newswires

Click to enlarge

Trading Royal Bank of Scotland – An Example

Let’s say you think that Royal Bank of Scotland shares have upside potential as result of this broker upgrade. You decide to buy exposure to £10,000 worth of Royal Bank of Scotland using a CFD, at the current price of 248p. To do this, you need £2,000.

For the purpose of this example, let’s assume the Royal Bank of Scotland share price rises to 297p May high (+19.7%). Your profit would be £1970 from your initial investment of £2,000.

Conversely, let’s assume you open the above position, and place a stop-loss at 9% from the current price. Royal Bank of Scotland shares continue their downtrend, they fall 9% and hit your stop-loss. Your loss would be £900.

This is provided for information purposes only. It should not be taken as a recommendation.