JPMorgan downgraded Lloyds Banking (LON: LLOY) shares and upgraded Barclays (LON: BARC) shares in a note to clients on Monday.
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Analyst Raul Sinha moved Lloyds Banking to Neutral from Overweight with a 58p price target, reshuffling the firm's preferences on UK bank stocks heading into 2023.
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The analyst explained that risks look evenly balanced for the sector, with worries about net interest margins peaking in the year's second half, offset by defensive attractions for larger UK banks.
He added that consensus estimates for Lloyds are more optimistic than the bank itself.
Furthermore, in his research note, Sinha lifted Barclays to Overweight from Neutral, raising the firm's price target on the stock to 220p from 180p.
The analyst explained that Barclays has the most favorable risk/reward among UK domestic lenders and is now the firm's top pick.
Barclays shares are up 1.8% at 159.10p at the time of writing, although the stock is down more than 17% this year. Lloyd's is down over 6% in 2022, and after dipping in the early part of Tuesday's session, it is now down just 0.25% on the day.
According to TipRanks, five analysts have a Buy rating on Lloyd's, with four at Hold and one at Sell, while eight have a Buy rating on Barclays, with four at Hold and none with a Sell rating on the stock.
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