In a report released today, Alvaro Serrano from Morgan Stanley upgraded Lloyds Banking (LLOY – Research Report) to a Buy, with a price target of p90.00.
Alvaro Serrano has given his Buy rating due to a combination of factors including the acceleration in Net Interest Income (NII) expected in both 2025 and 2026. The guidance provided in the fourth quarter, along with early 2025 system data, suggests that Lloyds Banking is likely to exceed its own NII guidance for the year, with further growth anticipated in 2026. Additionally, Serrano highlights the underappreciated growth in Other Income, driven by insurance and strategic acquisitions, which is expected to surpass market expectations.
Another factor influencing the Buy rating is the reduced risk associated with Motor Finance. Although there was previous uncertainty regarding litigation, the upcoming hearing and the provisions already made by the company suggest that any additional financial impact will be manageable. Furthermore, the increase in share buy-backs and a higher earnings forecast contribute to a more favorable outlook, leading to an increased price target for the stock. Overall, the stock’s valuation appears attractive, trading below the sector average, with a strong earnings outlook and a 10% total yield.
In another report released on February 26, Barclays also maintained a Buy rating on the stock with a £0.90 price target.
Based on the recent corporate insider activity of 109 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of LLOY in relation to earlier this year.