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(Sharecast News) - Citi downgraded HSBC on Wednesday to 'neutral' from 'buy' and cut the price target to 1,570p from 1,640p, saying it expects the shares to pause for breath.
Citi noted that HSBC shares are up 40% year to date, making it one of the best performing stocks in the sector. They now trade on around 11x forward price-to-earnings and 2.2x P/TB for a circa 18-19% return on tangible equity.
"For a further re-rating from here we believe one needs to believe in a period of more rapid top-line growth and while there are some encouraging signs, we believe this will take time to materialise," Citi said.
"Meanwhile HSBC has guided to incremental cost spend near-term, which may limit the magnitude of positive jaws in 2027, and the renewed focus on volume growth may cap near-term buybacks."
As a result, Citi said it expects the shares to now pause for breath, hence the downgrade.
At 1410 BST, the stock was down 4.5%, also dragged lower by a report that Chinese mainland tax authorities have started levying personal income tax on the returns of offshore insurance policies.
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