Shore Capital downgraded Lloyds Banking Group Plc to 'sell' from 'hold' on Monday following a strong run that has left the shares fully valued, but lifted the price target to 91p from 84p.
The broker said Lloyds' full-year results showed better-than-expected profitability primarily due to a lower-than-expected impairment charge in the fourth quarter, making this a "relatively low-quality" beat.
Nevertheless, return on tangible equity guidance for FY26 was upgraded to more than 16% from more than 15%, which Shore thinks the company will "comfortably" achieve.
However, it said Lloyds may struggle to sustain the ROTE in the long-term "given the competitive pressure and risk of further taxation that such supernormal returns may eventually attract".
At 1240 GMT, the shares were up 0.6% at 109.60p.