On Monday, Barclays (LON:BARC) updated its outlook on HSBC Holdings (LON:HSBA:LN) (NYSE: NYSE:HSBC), raising the price target to GBP9.40, up from the previous GBP8.20. The bank’s stock continues to hold an Equalweight rating according to Barclays.
The adjustment of the price target comes as Barclays analysts anticipate potential upside risks to HSBC’s earnings and believe there is room for an attractive self-improvement narrative within the company. However, the analysts noted that details of any restructuring within HSBC would need to be disclosed to further evaluate the bank’s prospects.
Barclays highlighted that their forecasts are approximately 10% higher than the co-consensus profit before tax (PBT) excluding notable items such as Cumulative Translation Adjustments (CTA) for the year 2026. Additionally, they project a roughly 15% return on tangible equity (RoTE) extending into 2027.
Despite the positive outlook on earnings and self-help potential, Barclays also acknowledged the impact of volatile geopolitics on market sentiment. The current trading multiple for HSBC stands at 1.1 times tangible net asset value (TNAV) or alternatively, 7 times forward price-to-earnings (PE), which Barclays analysts believe adequately reflects the geopolitical concerns. The bank’s stock also offers a running capital return yield of over 10%.
The raised price target reflects Barclays’ assessment of stronger projected earnings and an updated foreign exchange outlook, though it is balanced by a higher cost of equity (COE) considered by the analysts. The overall sentiment from Barclays suggests cautious optimism, with recognition of the factors that could influence HSBC’s financial performance moving forward.
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