2024-05-06 15:12:43 ET
Summary
- HSBC's Q1 earnings fell, driven by increasing Expected Credit Losses and overhead costs, reflecting potential stress signs.
- The company announced a share buyback and dividend, boosting the stock price in the short term.
- Geopolitical risks pose a headwind for the company.
- With the increased stock price, the majority of good news has already been baked-in and there is limited further upside potential for investors thinking of initiating new positions in HSBC in my view.
Overview
In my last article on HSBC ( HSBC ) in Feb 2024, I had rated the stock as a buy, with a 28% upside potential and a fair value of $50 / share. The company recently released its Q1 earnings on 30 April, and the stock price jumped by ~5% last week- with majority of the gains occurring post the earnings release. Since my last recommendation, the stock has already gained over 10% in 3 months (vs. 3.24% for S&P 500)....
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HSBC: Limited Upside Potential With Some Headwinds (Rating Downgrade)