HSBC (LSE: HSBA) shares have had a terrific run, but the more I look at them, the more worried I get. Can they really maintain their recent speed?
No stock climbs in a straight line forever, so this is always a valid question to ask of any high flyer. And HSBC certainly fits that description. The shares are up around 250% in five years. The total return is roughly 280% including reinvested dividends.
HSBC has a massive opportunity in Asia, where it generates roughly half its revenue, with hefty exposure to Hong Kong and China. That actually put me off three or four years ago. I feared the fallout from a US-China superpower clash could leave the bank crushed in the middle. HSBC’s board worked around that geopoliltical threat by reshaping the business, and its shares have ploughed on.
The profits keep coming
In 2022, HSBC made $17.5bn of reported profit before tax. By 2025, that had hit $29.9bn. The 2026 number was down slightly but that was due to a series of notable items. After stripping those out, profit before tax rose 7% to $36.6bn. That’s an awful lot of money.
First-half 2027 was pretty decent too. Underlying profit before tax, excluding notable items, rose 6% to $20.4bn. Expected credit losses climbed from $1.9bn to $2.4bn, while HSBC’s still suffering from weakness in Hong Kong and mainland Chinese commercial property.
China’s also tightening scrutiny of wealthy citizens using offshore structures and services, to increase tax revenues and control capital flows. HSBC’s exposed to any tightening of the rules.
Two very different targets
This may explain the widely difference in broker forecasts. On 23 September, Citigroup lifted its latest target from 1,570p to 1,640p. If that comes good, it would see the shares rise 33% from today’s 1,453p. Despite that, Citi rates the shares Neutral, not Buy, as higher costs may offset improving revenues. It thinks greater investment in growing the business could reduce share buybacks for a while too.
An earlier forecast from Jefferies (4 August) set a lowly 1,120p target, along with a Hold rating. The broker praised HSBC’s balance sheet strength but reckons the shares may have run too far. With the shares flattening out over the last three months, it may be right.
I bought HSBC shares in May and they’ve started reasonably well, but with the price-to-earnings ratio nudging 16x I think we see a dearth of action for a while. The trailing yield has retreated to 3.8%.
Forecast value and income
The forward picture looks brighter, with a P/E of just 11.7x. The forecast yield’s 4.46% for 2026 and expected to top 5% in 2027.
I still think HSBC’s a terrific long-term opportunity for share price growth and income. But there will be bumps along the way, especially with today’s macro uncertainty, China risks and rising credit losses.
It’s still well worth considering, particularly if we get any dips in the weeks ahead. But I’ve got my eyes on FTSE stocks with more growth and income potential today…
Should you invest £5,000 in HSBC Holdings right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if HSBC Holdings made the list?
Harvey Jones owns shares in HSBC.
This story originally appeared on Motley Fool
