Analysis: why I'm optimistic about Lloyds Bank shares
7th February 2022 07:48
by Alistair Strang from Trends and Targets
Lloyds Bank has underperformed rivals over a five-year period, but is at least back near pre-Covid levels. Independent analyst Alistair Strang updates his forecasts.
We wonder if the recent little hiccup with Meta Platforms' (NASDAQ:FB) share price, among others to be fair, share prove emblematic of a wider problem. For quite some time, we’ve thought many tech stocks – and some pharma’s – have enjoyed too great a success, share prices going higher, far higher, than logically sane. But somewhere in the world, there’s a market where share prices tend opt for boredom, the concept of flamboyant behaviour suspected to be a thing of the past.
Obviously, we’re looking at the FTSE 100, home of undervalued but respectable shares. The UK’s retail banks, long ignored, may even be poised for some time in the sun, hopefully seen as a safer haven against the hysterical behaviour exhibited in the US market place against the likes of Moderna (NASDAQ:MRNA), Netflix (NASDAQ:NFLX), and recently, Meta (aka Facebook).
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With the likes of Barclays (LSE:BARC), the share price is already starting to look interesting, something especially clear when viewing the company performance on Wall Street. Lloyds Banking Group's (LSE:LLOY) US share price, is not yet copying Barclays on Wall St, presently trading around $2.76, but requiring above $3.43 to tell us to anticipate some real movement. Such a trigger looks capable of provoking a cycle to $5.85 eventually.
To return to a UK perspective and the sterling share price valuations for Lloyds, if we rely on trend lines, the immediate Blue downtrend suggests the share needs above 60p currently to promote joy for the future, ideally triggering a surge to an initial 65p with secondary, if bettered, a longer term 77p.
Source: Trends and Targets. Past performance is not a guide to future performance
What surprises us currently are two very different formula, both of which point to the immediate movement cycle heading to 58.5p as a major point of interest.
Generally speaking, when a bunch of arguments produce similar target levels for a share, it takes something quite dramatic for such a target to be avoided. As a result, despite Lloyds bouncing around in the lower 50’s, we’ve considerable hope sufficient force will appear to drive it upward to our 58.6p.
We suspect the price shall only require closure above this 58.5p target level to signify our bigger picture ambition of 77p assuming a degree of reality. For everything to start going horribly wrong, the share price currently needs weaken below 47p.
Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.
Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea.
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