Some of the world’s largest investment banks have been lowering their price targets for Lloyds Banking Group (LSE:LLOY) shares. These include Goldman Sachs and Citigroup. 

There are reasons why analyst sentiment has turned more pessimistic recently. But I think the time to buy shares is when other investors don’t want to – so should I be looking at Lloyds for my portfolio?

Goldman: car loan uncertainty

Goldman Sachs has cut its price target from 64p to 63p. The central reason for this is uncertainty over the ultimate outcome of the ongoing investigation into car loans. 

Last year, Lloyds put aside £450m to cover potential liabilities. And while the case is still ongoing with the UK Supreme Court, the possibility of this extending to other loans increases the risk. 

As a result, Goldman’s analysts have lowered their price target to account for the unpredictability. But with the stock still trading below 55p, as I write, it’s still a long way below the revised estimate.

It’s worth noting though, that car loans aren’t the only potential challenge for Lloyds at the moment. There’s also the possibility of lower interest rates to consider as 2025 gets closer.

Citigroup: domestic risks

At the start of the year, Citigroup’s analysts had a Buy rating on Lloyds shares (despite the car loan risk). Now though, they’re much less positive, with a price target of 56p. 

As the new year approaches, HSBC is Citi’s preferred UK bank. And that’s mostly because it has less of a UK focus than the likes of Lloyds, which is facing a challenging economic environment right now.

House prices have been pushing higher through 2024. And while they’re still short of their 2022 highs, this is likely to weigh on demand for mortgages. 

The Bank of England cutting interest rates might help with this difficulty. But this is likely to replace one issue with another as lower rates typically cause lending margins to contract.

Time to be greedy?

Importantly, Lloyds still has its competitive advantage intact. The bank has the largest market share of UK retail deposits, which gives it a cost advantage when it comes to financing its loans. 

From a long-term perspective, this is potentially the most important thing. And that raises the question as to whether I should be looking at buying the stock now. 

I see the potential car loan liability as much more significant than the macroeconomic issue. That’s because – as Goldman’s analysts note – it’s almost impossible to estimate accurately.

Yet the lower the Lloyds share price goes, the more it offsets this risk. And over the long term, I think the structural advantage Lloyds still has matters much more than the short-term risks it’s facing.

Why I’m not buying

While I don’t disagree with Goldman having a price target well above the stock’s current level, I’m not about to buy it. The reason’s relatively simple – there are other opportunities I like even more.

For my own portfolio, I’m looking to concentrate on these. But I’ll keep an eye on the Lloyds share price as things progress and I’m not ruling out the stock reaching a level I think is too cheap to ignore.