Berenberg raises target price on NatWest
By Iain Gilbert
Date: Monday 01 Aug 2022
(Sharecast News) - Analysts at Berenberg raised their target price on lender NatWest from 300.0p to 350.0p on Monday, stating the group's second-quarter results had provided "a valuable glance" at its "attractive" return prospects.
Berenberg said that aside from "exceptional" Q2 capital returns, equivalent to a 9% yield, NatWest now expects full-year revenues to rise by roughly 25% year-on-year to approximately £12.5bn - 6% above consensus expectations.
The German bank said NatWest's strength was the result of higher interest rates on its "high-quality deposit franchise" and the bank's success in growing at a time when private sector balance sheets have been "exceptionally strong".
"These sources of strength are not new but have been subject to elevated scrutiny recently. NatWest's Q2 2022 revenues, which exceeded consensus by 8%, show that this strength is real and material," said the analysts," who also reiterated their 'buy' rating on the stock.
"Given an FY 2023E return on tangible equity of circa 15%, we believe NatWest's circa 10% discount to tangible book value is unwarranted."
Reporting by Iain Gilbert at Sharecast.com
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