Is the Lloyds share price worth 45p a stock?

Analysts remain upbeat about the lender, despite bad debts mounting due to Covid-19 and a myriad of other headwinds faced by UK banks. But is Lloyds capable of reaching brokers average share price target of 45p per share in 2020?

Analysts remain upbeat about Lloyds, with the stock boasting a consensus price target of 45p per share – implying a potential upside of 50% for the high street lender. But is Lloyds stock capable of hitting that target in 2020?

Despite analysts optimism, Lloyds has an uphill battle ahead of it, with the stock struggling to move above 30p support level it has found itself in since April due to a myriad of challenges – chief among the coronavirus pandemic.

The Covid-19 crisis has wreaked havoc across the banking sector, leading to a significant rise in bad loans on Lloyds and its peers balance sheets, while interest rates now look set to remain at record lows for the foreseeable future which serves to hurt the profitability of lenders.

Lloyds is trading at 30p per share at the time of publication, with the stock down 52% year-to-date.

Lloyds bids farewell to long-standing CEO next summer

Last week, Lloyds Group CEO Antonio Horta-Osorio announced his planned departure from the high street lender next summer after it was confirmed that Robin Budenberg will take over as chairman in early 2021.

After 10 years at the helm, where he helped revive Lloyds after the 2008 financial crisis, Horta-Osorio will leave his replacement with some big shoes to fill and a mountain to climb.

‘It is of course with mixed emotions that I announce my intention to step down as chief executive of Lloyds Banking Group by June next year,’ Horta-Osorio said.

‘I have been honoured to play my part in the transformation of large parts of our business. I know that when I leave the group next year, it has the strategic, operational and management strength to build further on its leading market position,’ he added.

A change of chairman and CEO next year could be exactly what Lloyds needs to help lift its subdued share price. But it could also create greater uncertainty about the path forward at a time when the lender needs real leadership as it emerges out of the Covid-19 crisis and the UK severs ties with the EU.

Covid-19 wipes out Lloyds profits

Lloyds unveiled a disappointing set of first quarter (Q1) results in April, with profits down 95% after the lender was forced to wear a £1.4 billion charge to cover a surge in bad loans as a result of the pandemic.

‘The coronavirus pandemic presents an unprecedented social and economic challenge which is having a significant impact on people and businesses in the UK and around the world,’ Horta-Osorio said.

‘The economic outlook is clearly challenging with the longer term outcome dependent on the severity and length of the pandemic and the mitigating impact of Government and other measures in the UK and across the world.’

‘Throughout this period of uncertainty we will continue to work closely with Government, regulators and other authorities and use the strength of our balance sheet and business model to ensure that we play our part in supporting our customers and the UK economy,’ Horta-Osório added.

Lloyds will unveil its half-year results on 30 July, with investors eager for an update on the bank’s performance. The results will also be a test to see if investors sentiment will improve enough to help lift the stock above its 30p support level and if it has the legs to reach analysts target price of 45p per share.

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