Analysts charmed by HSBC’s earnings push stock price outlook to the most bullish since July 2019

Name: HSBC’s break-up dilemma: why bank’s largest shareholder is pushing for change
Uploaded: 2023-05-03T08:30:04.000Z
Duration: 5 min 25 s
Description: HSBC’s break-up dilemma: why bank’s largest shareholder is pushing for change

Analysts are most bullish on HSBC’s stock upside since July 2019, following the UK lender’s stellar first-quarter report card

Bank board and management to square off against some shareholders later this week who are instigating a split in its Asian business

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Analysts have raised their consensus price target for HSBC stock to the highest level since July 2019. Photo: Jelly Tse

Jiaxing Li

Published: 4:30pm, 3 May 2023Updated: 4:32pm, 3 May 2023

Analysts encouraged by HSBC’s consensus-beating first quarter results have turned more bullish on the biggest commercial bank in Hong Kong, with at least nine upgrades sending the stock price target to the most optimistic in almost four years.

Goldman Sachs lifted its 12-month price target by 8 per cent to HK$81 while Morgan Stanley upgraded its expectations by 3.5 per cent to HK$67.50, according to reports on Wednesday. Morningstar improved its fair-value estimate by 2 per cent to HK$78.50 on Tuesday.

The current market consensus stands at HK$71.01, the highest level since July 2019, according to 34 analysts tracked by Bloomberg. The target was HK$69.41 about three weeks ago.

The bullish mood follows the UK-based lender’s better-than-expected report card last quarter, when net income tripled with fatter interest-rate margins on the back of global policy tightening drive. Gains from its opportunistic £1 (US$2.50) purchase of Silicon Valley Bank in mid-March also boosted its results.

“We remain overweight on the Hong Kong listing and keep HSBC as our top pick” in Hong Kong and Southeast Asia, Morgan Stanley analysts including Nick Lord said in a note to clients on Tuesday. “Rising rates have driven the company’s net income higher, while the benefit of higher rates for returns is not captured in the price.”

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HSBC’s break-up dilemma: why bank’s largest shareholder is pushing for change

The US investment bank expects further recovery in HSBC’s net interest margin in the second half this year, as the Hong Kong Interbank Offered Rate or Hibor is set to recover and track the US dollar Libor more closely, the analysts wrote.