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5 reasons I think Lloyds share price can touch 60p

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·3-min read
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Lloyds Bank (LSE: LLOY) has seen some rocky times in recent years. It was impacted by Brexit and the limbo around it, a indifferent economy, and the corona crisis. The effect can still be felt, to be sure.

But things are looking up.

This is evident from its improving financials, expectations of better asset quality, and the return of economic growth.

Lloyds share price trends upwards

It is little wonder then that the Lloyds share price has been on a roll. From the end of January it is up by over 45%. Over the past year, it is up by an even more impressive 68%.

As I write, it is at 48p. This means, in a single bullish trading session it can touch 50p. In my last article on the Lloyds share price, I had raised the question of whether it was possible.

My conclusion was that it could read 50p. I saw this happening in months, if not less. It is almost there in just over two weeks already.

How about 60p for the Lloyds share price?

This leads me to the next question. Can the Lloyds share price rise to 60p?

Again, I think it can. Here are five reasons why.

#1. Improving financials: Lloyds Bank’s next set of results is likely to see continued improvements as fundamental aspects impacting the bank’s business are in its favour. Stock prices can move upwards when the company releases positive updates or results. We can expect some share price increase when that happens.

#2. Continued stock market rally: I expect the stock market rally to continue. Even though the FTSE 100 index has had a wobble in the past few days, its broad trend is upwards. This should positively impact the Lloyds share price as well.

#3. Possible return of high dividends: Low present dividends reduce banks’ attractiveness to investors. But there is little banks can do about it. Dividends are based on regulatory guidance, which luckily, is expected to be temporary. As the economy goes back to normal, these measures should be withdrawn. This could add further momentum to the Lloyds share price, which had a high dividend yield before the pandemic.

#4. Encouraging past share price trends: Going by past trends, it has taken a little over three months to add 12p to its share price. Conceivably then, it can rise to 60p in another three months. In other words, the increase is not outside the realm of possibility.

#5. The past is proof: At the start of 2020, it was already at 60p levels, so they are not unheard of or too far in the past to be reached again.

A point to note

From present levels, this would mean a 25% increase in the Lloyds share price in a quarter. But unless it can continue to rise even from there, I think a long-term investor should look at the bank more carefully.

For years before the pandemic happened, the bank’s price trend was flat. And after the pandemic, it dropped sharply.

What I’d do now

For a long-term investment, I would think this one through first.

The post 5 reasons I think Lloyds share price can touch 60p appeared first on The Motley Fool UK.

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Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has recommended Lloyds Banking Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Motley Fool UK 2021

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