Why I think the Lloyds share price could do even worse in 2020 than 2019

first_img Image source: Getty Images “This Stock Could Be Like Buying Amazon in 1997” Enter Your Email Address Alan Oscroft | Thursday, 13th February, 2020 | More on: LLOY I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Simply click below to discover how you can take advantage of this. Why I think the Lloyds share price could do even worse in 2020 than 2019 I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.center_img Our 6 ‘Best Buys Now’ Shares Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! We approached the end of 2019 with the prospect of a no-deal Brexit looking like it was disappearing. And I thought that could signal a turn in fortune for Lloyds Banking Group (LSE: LLOY) shareholders.The shares even started to tick up in December once the election results were known. But that was before our new Prime Minister committed us to a do-or-die pact, insisting that EU negotiations must complete in 2020.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Alas, from a 73.66p high on 13 December, the Lloyds Bank share price has slumped by 22% to 57.4p.Tough talksIn recent days, the EU has signalled a hardening stance on its negotiating position. Our European friends, it seems, aren’t going to just lie back and think of Boris. But I really don’t see why anyone would be the least bit surprised by that.British banks aren’t going to get automatic passporting rights, but that shouldn’t make much direct difference to Lloyds, which has remade itself as a UK-focused retail bank. That’s been a success so far, turning it back to growing profitability.After several years of recovering earnings, analysts are expecting to see pre-tax profit of around £6.8bn for the 2019 year just ended. We’ll have to wait until 20 February for the results, but I’ve seen nothing to suggest there’ll be any disappointment.The balance sheet is a lot stronger now, and Lloyds comfortably passed the Bank of England’s latest stress tests in December.DividendThe dividend has come storming back too. There’s a yield of 5.9% on the cards for 2019, which would be around 2.1 times covered by predicted earnings. Forecast rises for the next couple of years would take that to 6.4% by 2021 (though cover would drop slightly, to 1.9 times).If all that sounds good, and I think it does, why is the Lloyds share price performing so badly? The biggest bearish factor stems from the very same thing that isolates Lloyds from the EU financial markets. While focusing on the UK market makes a positive difference there, Lloyds is exposed solely to the UK’s economic performance. And that might not be great.While the UK economy grew by 1.4% over the whole of 2019, the final quarter was flat. And the latest forecasts suggest overall weakening in 2020. And what if Boris’s bluster doesn’t get us a good deal with the EU? That, I reckon, would send the BoE back to its forecasting blackboard to erase all hope of growth in the next few years.Then there’s competition, from both the challenger banks and from ever more new ways of moving cash around.Still a buySaying all that, I still rate Lloyds as a buy.We’re looking at forward P/E valuations of around 8.5, which I see as very much based on a worst-case scenario. I’ve never been a worst-case kind of person, and I think there’s too much downside fear priced into the shares.If EU negotiations go well, I could see Lloyds shares storming ahead in 2020. But if they turn bad, I think we could be in for yet another weak year. What will I do? I’ll keep on taking my dividends, and I might even top up. Alan Oscroft owns shares of Lloyds Banking Group. The Motley Fool UK has recommended Lloyds Banking Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. See all posts by Alan Oscroftlast_img read more