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On Tuesday, BofA Securities analysts downgraded HSBC Holdings (NYSE:HSBC) stock from Buy to Neutral. The decision comes as analysts express concerns over balanced risks related to the U.S. rate cut trajectory and tariff re-escalation.
The analysts also adjusted their price target for HSBC, reducing it to INR9.30 from INR9.60. They cited potential challenges such as the possibility of a lower-for-longer HIBOR, which could impact the bank’s operations.
Despite the downgrade, the analysts remain confident in the quality of the HSBC franchise and acknowledge the management’s efforts to enhance the bank’s long-term prospects. However, they noted that the current valuation, trading at 1.2 times P/TBV25e with sustainable returns of around 14-15%, does not appear cheap compared to the sector.
The report highlights that buybacks are less likely to offer surprises, leading to the downgrade as analysts see better opportunities elsewhere.
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