Lloyds share price is about 65% undervalued. Should you buy?

Lloyds Bank (LON: LLOY) share price continued its slow recovery after the UK published better-than-expected economic data. The shares rose to a high of 45.90p, which is higher than the July low of 40.80.

UK economic decline

Lloyds is the biggest retail and commercial bank in the UK with over 26 million customers. The firm operates through its eponymous brand and other companies like Halifax, Bank of Scotland, Scottish Widows, Schroders Personal Wealth, Embark, and Citra among others.


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Lloyds Bank is primarily a British brand that has no major operations abroad. As a result, its stock tends to react whenever the UK publishes important economic data. On Friday, numbers published by the Office of National Statistics (ONS) showed that the UK economy contracted by 0.6% in June after it expanded by 0.4% in the previous month. 

Additional data revealed that the country’s manufacturing production declined by 1.6% in June while industrial production fell by 0.9%. The two declines were better than the median estimates decline of 1.8% and 1.3%.

These numbers came a week after the Bank of England (BoE) decided to hike interest rates by 0.50% to fight the elevated inflation. In a statement, the bank’s governor warned that the country could slip to a recession in the fourth quarter.

Lloyds Bank also published relatively upbeat first-half results, helped by the rising interest rates. The firm said that its profit after tax rose to 2.8 billion pounds while its net income rose to 8.5 billion pounds. Its loans and advances to customers rose by 7.5 billion pounds to 456 billion pounds.

According to Simply Wall St, Lloyds share price is currently undervalued. A DCF calculation found that the company share price was about 65% undervalued. They believe that it should be trading at 125p. Further, its price-to-earnings ratio is below that of its peers.

Lloyds share price forecast

lloyds share price

The four-hour chart shows that the LLOY share price found a strong support at 41.92p, where it has struggled to move below since April. The stock then made a strong comeback above the descending trendline that is shown in blue.

Lloyds share price has moved above the 25-day and 50-day moving averages while the MACD has moved above the neutral point. Therefore, the outlook for the shares is currently bullish, with the next key resistance being at 50p.

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Source: https://invezz.com/news/2022/08/12/lloyds-share-price-is-about-65-undervalued-should-you-buy/