Back to top

Analyst Blog

On May 30, 2013, we reiterated our long-term recommendation on HSBC Holdings plc at Neutral. This was based on the company’s strong first-quarter results, which were significantly better than the year-ago period.

Why Neutral?

HSBC’s earnings for the said quarter came in at 33 cents per share, easily beating the prior-year quarter earnings of 16 cents. The robust performance was driven by top-line improvement and reduced operating expenses. However, dismal performances by all divisions, except Global Banking and Markets, and Other, acted as headwinds.

Following the first-quarter results, the Zacks Consensus Estimate for 2013 has remained stable at $4.72 per share over the last 30 days. For 2014, the Zacks Consensus Estimate rose 2.0% to $5.18 per share, over the same time-frame. Hence, HSBC now has a Zacks Rank #3 (Hold).

With its sole focus on fast-growing and profitable markets, in May 2013, HSBC announced the second round of its cost-cutting program with the aim of saving $3 billion by 2016. Moreover, amid an uncertain macro environment, the company remains strong with respect to its balance sheet and capital position, which attribute it a competitive advantage over other banks.

However, revenue growth at HSBC is expected to remain sluggish in the subsequent quarters, as the low interest rate environment will continue to hamper revenue generation. Further, it would become difficult for the company to improve operating results based merely on uncertain benefits like lower impairment charges, as the tepid economic recovery and low interest rate environment are expected to adversely impact its financials in the coming quarters.

Other Foreign Banks Worth Considering

Better performing foreign banks include Mitsubishi UFJ Financial Group, Inc. (MTU - Analyst Report), Deutsche Bank AG (DB - Analyst Report) and Credit Suisse Group AG (CS - Snapshot Report), all of which carry a Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
TRIQUINT SE… TQNT 20.67 +6.52%
RF MICRO DE… RFMD 12.47 +6.04%
VASCO DATA… VDSI 14.77 +4.68%
STRATTEC SE… STRT 80.24 +3.00%
PATTERSON-U… PTEN 34.54 +2.98%