On Wednesday, Berenberg initiated coverage on HSBC Holdings (NYSE:HSBC) stock with a Buy rating, setting a price target of $52.00 per share. The firm highlighted HSBC's first-quarter performance in 2024, noting it exceeded expectations.
Strong trends in the bank's net interest income (NII) and controlled expenses were underscored as particularly positive, marking a turnaround from the less encouraging outlook provided during the fiscal year 2023 results.
According to the firm, the bank's Wealth business continued to show positive momentum. Additionally, HSBC announced an increase in its quarterly stock buyback program to $3 billion, a move that was not anticipated by the market. These factors contributed to the positive outlook presented by Berenberg.
Berenberg emphasized that HSBC's current trading at 1.0 times tangible book value (TBV) does not fully reflect the bank's potential. The bank's sustainable return on tangible equity (RoTE) is estimated at around 14%, and the firm believes HSBC's growth and capital return prospects are currently undervalued in the market.
The firm's assessment is based on the recent financial results and the strategic moves made by HSBC. The bank's efforts to enhance shareholder value through buybacks and its performance in key business areas have been noted as indicators of its strength and potential for growth.
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