Lloyds share price has staged a major comeback and is slowly nearing its highest point this year as British stocks join the broader stock market rally. The stock surged to 103p, up sharply from the year-to-date low of 85p, and signs are that the bull run has more room to run.
Lloyds Bank stock has soared as catalysts emerged
LLOY stock has made a strong rebound in the past few weeks as investors assessed the impact of the ongoing Iran war on British banks.
Analysts believe that these banks will not be impacted directly. For one, Lloyds is largely a national company that has little business in other countries.
At the same time, the war has led to inflation concerns, meaning that the Bank of England may not deliver interest rate cuts as some analysts were expecting.
The most recent data showed that the country’s consumer inflation remained above the key level of 3% in February and analysts believe that this figure will get to 5% because of the rising energy costs.
Banks like Lloyds and NatWest do well when the Bank of England has maintained a hawkish tone. Higher interest rates boost the spread between the interest that the company pays to depositors and the one it receives from loans.
The company has also jumped as investors started buying the dip in European bank stocks, which most analysts believe have become highly undervalued following the recent pullback.
Additionally, the ongoing LLOY stock rally is in line with the broader performance of the stock market, with the FTSE 100 Index hovering near its all-time high.
It has also been boosted by the recent earnings by the biggest American banks like JPMorgan and Goldman Sachs.
The next important catalyst for the LLOY stock price will be its first-quarter earnings, which will come out next week.
City analysts believe that the company’s business continued doing well in the first quarter. The most recent consensus document shows that the average estimate is that its net interest income rose to £3.55 billion in the first quarter from £3.52 billion in Q4.
Analysts expect that the net income rose to £4.802 billion, while its underlying profit softened a bit to £1.8 billion, driven by a £388 million increase in impairment.
The company will continue returning funds to investors, with the management aiming to bring the CET-1 ratio to 13% from the previous 13.5%.
Most importantly, analysts believe that Lloyds has more room to grow. For example, the estimate is that its annual profit will jump to £6.25 billion this year from £4.7 billion last year. It will then move to £7.72 billion in 2028.
LLOY stock price technical analysis
Lloyds share price chart | Source: TradingView
The ongoing LLOY stock price rally is in line with our recent prediction in which we pointed to the forming falling wedge pattern, a common bullish reversal sign in technical analysis. It has now moved above the upper side of the wedge pattern, confirming the outlook.
At the same time, the Average Directional Index (ADX) has jumped, a sign that the bullish momentum is continuing. It also sits above the 50-day and 100-day Exponential Moving Averages (EMA).
Therefore, the stock will likely continue rising as bulls target the year-to-date high of 112p, which is about 8.2% above the current level.
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