Emerging markets bank Standard Chartered could ‘surprise’ over the next two years, according to an investment briefing by JPMorgan Cazanove.
JPM raised its rating for Standard Chartered from neutral to overweight, and included the bank in its European top picks for 2018.
In a briefing note to investors, JPMorgan analysts said they could “see potential for 2018-20 EPS to surprise positively against consensus”.
They said the bank’s shares had lagged the sector since the beginning of the year and remained undervalued, in their view.
They said that after a meeting with CEO Bill Winters, “we came away constructive on the mid-to long-term recovery potential for the group”.
They added: “Separately, we revisit the group’s recovery path to 2021 and come to the conclusion that RoTE is likely to improve beyond 10.8% in 2021 with potential for upside risk from revenue growth.
“In an environment where investors may seek revenue growth across the sector, we believe that StanChart is attractive and poised to deliver mid- to high-single-digit revenue growth which is as yet undiscounted.”