HSBC share price: where next after weak results in Europe and US hurt profits?
Analysts remain mixed about the bank’s share price trajectory after the lender revealed an 18% drop in its third quarter profit last month, driven by weak results in its European and US units.
HSBC labelled the performance of its European and US divisions as ‘not acceptable’ in its third quarter (Q3) earnings at the end of last month.
Weak results from the two divisions contributed to the bank recording an 18% drop in profit to £3.8 billion in the three months to the end of September.
‘Parts of our business, especially Asia, held up well in a challenging environment in the third quarter,’ HSBC CEO Noel Quinn said. ‘However, in some parts, performance was not acceptable, principally business activities within continental Europe, the non-ring-fenced bank in the UK, and the US.’
‘Our previous plans are no longer sufficient to improve performance for these businesses, given the softer outlook for revenue growth,’ he said.
‘We are therefore accelerating plans to remodel them and move capital into higher growth and return opportunities.’
Looking to trade HSBC? Open a live or demo account with IG.
Analysts have mixed feelings about the HSBC share price
Goldman Sachs reiterated its ‘buy’ rating for the stock in November, while Jefferies International upgraded its rating from ‘hold’ to ‘buy’.
The pair remain optimistic about the bank’s share price trajectory, with Goldman issuing a target of 865p, while Jefferies offered a target of 790p for the stock.
Based on HSBC closing at 579p on Tuesday, analysts from the two investment banks believe that the stock has a potential upside of between 36.4% and 49.3%.
But analysts from Berenberg do not share in Goldman Sachs and Jefferies optimism, with the Hamburg-based investment bank downgrading its rating for the stock from ‘hold’ to ‘sell’ this month.
Berenberg analysts also issued a target price of 490p, suggesting that the stock is overvalued and has a potential downside of -15%.
You can go long or short HSBC with IG using derivatives like CFDs and spread bets.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets
- Forex
- Shares
- Indices
