Lloyds Banking (LLOY)

Lloyds, with the UK’s biggest mortgage book, would likely benefit most from a Bank of England rate hike in May (able to charge borrowers more). Lloyds results, however, are likely to be closely watched for announcements on PPI provisions as well as any more favourable news on special dividends/share buybacks. Any further PPI would likely dent sentiment, although with only a year to go before the claims deadline, there is heightened potential for more. The recent special dividend and buyback news gave the shares a real boost in late Feb so any big jump in profits could be interpreted as meaning more shareholder returns on the way.

Lloyds shares have recently rebounded to break out from their 2018 downtrend. Could Q1 results be the catalyst for a share price recovery, retracing even more of that 12% decline?

Will Lloyds regain Jan highs of 72.7p (+6.1%) or fall back to March lows of 64p (-10%)?

• Shares bounced off rising support around 64p, breaking a 3-month downtrend, and above March highs
• Bullish cross by Directional Indicators
• Brokers are positive on LLOY, with over 80% forecasting that the shares will rise over 12 months
• 4% average results day trading range since 2012 (4.9% for Q1 updates).
• In the 10-day run-up to last April’s Q1 update, LLOY shares rallied 7.5% (avg. 4.7% all Q1’s since 2012)

Broker Consensus: 50% Buy, 25% Hold, 25% Sell

Bullish: Jefferies, Buy, Target 91p, +33% (21 Feb 18)

Average Target: 76.1p, +11% (12 Apr 18)5

Bearish: Berenberg, Sell, Target 55p, -20% (29 Nov 17)

Pricing data sourced from Bloomberg on 13 April 2018. Please contact us for a full, up to date rundown.