Zacks Investment Research downgraded shares of HSBC Holdings plc – ADR (HBC) from NEUTRAL to UNDERPERFORM on December 20, 2012, with a target price of $48.00.
We are downgrading our long-term recommendation on HSBC to Underperform to reflect the penalty to be paid to settle money laundering charges and its credit ratings downgrade by Fitch. Moreover, the company's third quarter net income was significantly down from the year-ago period and included additional provision for various investigations faced by it. Quarterly core results were adversely impacted by higher operating expenses. Nevertheless, improved top line and growth in total operating income were the positives. We believe HSBC is well positioned to benefit from its restructuring initiatives, extensive global network, diversified revenue sources and strong capital position. However, there are concerns related to the impact of the Euro-zone crisis, weak revenue growth in its mature markets and regulatory restrictions.
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