Lloyds Share Price Forecast for June 2021 – Time to Buy Lloyds Shares?

A surge in the number of cases of coronavirus as a result of the so-called Delta variant of the virus has spooked the markets this morning, with the British FTSE 100 index sliding by 1.8% so far in today’s session while virus-sensitive issues including Lloyds shares are losing ground as well.

So far this morning, the price of Lloyds shares is down 3.2%, this being one of the sharpest single-day loss experienced by the issue since late April this year.

Despite the fact that a total of 42 million individuals have already received a first dose of the COVID-19 vaccine in the United Kingdom, comments from the country’s top medical officer, Chris Whitty, cast a shadow on the possibility of these treatments serving as a quick end-game to the pandemic as the health professional emphasized that it could take as much as five years before vaccines can “hold the line” against the wide range of variants of the virus that will likely appear in the future.

This is not good news for bank stocks as it points to the possibility of lower-for-longer interest rates while inflation worries continue to threaten bank’s profitability in real terms.

In case you are wondering if today’s single-day sharp drop could be an opportunity to buy Lloyds shares at a lower price, the following Lloyds shares forecast will take a closer look at the firm’s fundamentals along with the current technical setup of the stock to see if that’s the case or not.

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Lloyds shares – what are analysts saying?

According to data from Seeking Alpha, the market is expecting a big surge in Lloyds’ earnings this year, with earnings per share expecting to land at around 27p per share, a number that is close to the firm’s pre-pandemic bottom-line results.

Meanwhile, analysts have made a few bullish calls on Lloyds lately, the most recent being from JP Morgan Chase, as the bank reiterated its overweight (buy) rating for the stock while upping its price target to 59p per share, resulting in a potential 27.4% upside if that target is hit.

Analysts from JP Morgan have previously cited a stronger yield curve in the UK and the potential improvement on capital returns for banks in the country as reasons behind their bullish recommendation for Lloyds.

Meanwhile, only a few days before JP Morgan’s price target hike, Barclays had stepped up to both reiterate its buy rating for the firm while upping its 12-month Lloyds shares forecast to 60p per share.

Lloyds shares – technical and fundamental analysis

Based on analysts’ forecasts for the year, Lloyds should generate around £3 billion in earnings, which results in a price-to-earnings ratio of 11.3 for the bank based on these forecasts and its current market capitalization of £34 billion.

Meanwhile, Lloyds paid an unappealing 0.57p dividend per share last year but the management has stated that it expects to increase distributions this year, with forecasts pointing to a dividend of 1.74p per share for this year, which would result in a dividend yield of 3.6%.

The odds that this dividend increase will materialize are particularly high if the firm’s profitability land nears the bank’s 2019 level and this makes Lloyds an attractive dividend stock as long as market conditions continue to improve and no further COVID scares appear on the horizon.

If the shares continue to drop in the following days, that could provide an opportunity to enter a long position at a much more attractive forecasted dividend yield.

For now, the outlook for Lloyds is bearish based on today’s price channel break, with the first area of support found at the 44.5p level if the price breaks below the 50-day moving average in the following sessions. This support area corresponds to a bullish price gap the price action left behind back in late April.

That said, if that gap is filled, chances are that the stock could move even lower, with the next support area found at 41p per share for a total downside risk of around 11%.

This bearish outlook is reinforced by a downtrend in momentum oscillators, with the RSI displaying a 39.4 reading (bearish) while the MACD is about to cross to negative territory on progressively higher negative momentum readings as well.

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