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Lloyds share price and FY earnings results preview


MongiIG

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Outlook on the Lloyds share price ahead of its upcoming FY results.

Lloyds logoSource: Bloomberg
 

 Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Monday 20 February 2023 

When are Lloyds Banking Group’s results expected?

Lloyds is set to release its full year (FY) 2022 results on 22 February 2023. The results are for the full year ending December 2022.

What is ‘The Street’s’ expectation for the FY results?

‘The Street’ expectations for the upcoming results are as follows:

Revenue of £18.01 billion : +14.25% year-on-year (YoY)
Earnings per share (EPS) at 7.14 pence : -11.85% (YoY)

Lloyds fundamental outlook

While Lloyds stock has jumped this year due to the Bank of England’s (BoE) rate hikes in order to curb inflation and is still up 9% year-to-date, last week it took a near 7% hit when its competitor Barclays’ share price dropped by 10% in a day when the bank missed analysts’ forecasts.

Whereas Barclays missed estimates due to a $361m US Securities and Exchange Commission (SEC) charge over securities sold in error in September and its poor performance in investment banking, due to a lack of mergers, IPOs and the like, Lloyds hasn’t had a run-in with the SEC and doesn’t have an investment banking arm.

Lloyds Banking Group, unlike many of its UK peers, is more susceptible to a weakening UK economy, however, given its greater domestic focus.

With the International Monetary Fund (IMF) at the end of January predicting that the UK economy is to contract 0.6% this year, the only G7 country expected to slip into a recession and worse than sanctioned Russia, the Lloyds share price could take a hit.

In addition, higher interest payments may down the line see customers default on loan payments and could lead to more non-performing assets which are expected to hit profits.

How to trade Lloyds into the results

How to trade Lloyds into the resultsSource: Refinitiv


Refinitiv data shows a consensus analyst rating of ‘buy’ for LLOYDS – 6 strong buy, 9 buy, 4 hold and 2 sell - with the median of estimates suggesting a long-term price target of 62.50 pence for the share, roughly 22% higher than the current price (as of 20 February 2023).

IG LLOYDSSource: IG


IG sentiment data shows that 88% of clients with open positions on the share (as of 20 February 2023) expect the price to rise over the near term, while 12% of clients expect the price to fall whereas trading activity over this week showed 66% of sells and this month 51% of buys.

Lloyds – technical view

Lloyds’ share price, which is up 9% year-to-date, stalled around the February 2022 high when it made its 9 February 2023 peak at 54.33 pence before slipping back towards the minor psychological 50p mark and the September peak as well as October-to-February uptrend line at 49.85p, all of which are likely to act as support ahead of full-year earnings.

Lloyds Daily Chart

Lloyds Daily ChartSource: Tradingview


Only a slip through the last reaction low, that is to say a daily candle low which is lower than the candle to its left and right, namely at the 19 January low at 48.42p, would indicate that the five-month advance may have come to an end. Slightly below it the 38.2% Fibonacci of the October-to-February uptrend can be seen at 48.29p and may also act as support, were it to be revisited.

Above these levels meanders the 55-day simple moving average (SMA) at 49.15p.

Lloyds Weekly Chart

Lloyds Weekly ChartSource: Tradingview


While the five-month uptrend line at 49.25p underpins on a weekly chart closing basis, further upside may be in store with an advance above the current February high at 54.33p possibly taking the Lloyds share price towards its January 2022 peak at 56.00p.

Further up lies the mid-June 2019 high at 59.41p ahead of the November 2018 peak at 60.20p.

Summary

Lloyds is set to release FY 2023 results on 22 February 2023.

FY 2023 results are expected to show a revenue of £18.01 billion, up 14.25% YoY, and EPS at 7.14 pence, down 11.85% YOY.

Revenue is expected to be boosted by higher UK interest rates but may in future slide as Lloyds is more susceptible than its UK competitors to a weakening economy, given its greater domestic focus and lack of an investment banking arm, especially if the UK were to head into a recession, the only country expected to do so in 2023 by the IMF.

Long-term broker consensus suggests the share to currently be a ‘buy’, with a median price target of 62.50 pence for the share, roughly 22% higher than the current price (as of 20 February 2023).

88% of IG’s clients with open positions are long the share with trading activity over this week showing 66% of sells but this month 51% of buys.

The Lloyds share price started the year off on a strong footing and currently trades around 9% higher than at the end of December but is short-term topping out. Over the next few days, the share may slide further towards the minor psychological 50p mark and the September peak as well as October-to-February uptrend line at 49.85p, all of which are likely to act as support ahead of full-year earnings.

While the five-month uptrend line at 49.85p underpins on a weekly chart closing basis, further upside may be in store with an advance above the current February high at 54.33p possibly taking the Lloyds share price towards its January 2022 peak at 56.00p.

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