How ironic would it be if Barlcays ended up being the next Lehman, when in fact they were the ones who bought Lehman? Both Jefferies and Barclays took a serious ax to Barclays estimates, cutting its price target in half, and calling into question the very existence of its investment bank. This is truly and unbelievable situation that is developing.
Both RBS and Lloyd’s aren’t fairing much better.
Joseph Dickerson, analyst at Jefferies Group LLC, cut Royal Bank of Scotland Group PLC to ‘hold’ from ‘buy,’ and lowered Barclays PLC to ‘underperform’ from ‘buy’. He also took an ax to his share price target for Lloyds Bank PLC.
“We cut 2016-2018 earnings estimates by 17 percent, 46 percent, and 72 percent for LLOY, RBS, and BARC respectively,” writes Dickerson. “The decline in earnings reflects a slow growth scenario in the U.K. characterized by lower loan growth, higher impairments and increase risk-weighted assets density.”
The U.K.’s potential exit from the European Union calls into question “the structure, profitability, and, indeed, existence of BARC’s investment bank,” he asserts.
Meanwhile, Royal Bank of Scotland is “73 percent owned by a government in turmoil,” he adds.
Jefferies lowered its price target on RBS to 227p from 370p, and slashed its price target on Barclays to 115p from 287p.
Separately, analysts at Bank of America Merrill Lynch cut Barclays to neutral from buy and reduced RBS to underperform from neutral, cutting their price targets by 21 and 41 percent, respectively.
BCS is lower by 20%, RBS is off by 14% and LYG is down 15% today.
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