GCIRBC Capital upgrades Close Brothers to 'outperform', shares surge
surged on Thursday as RBC Capital Markets upgraded the shares to 'outperform' from 'sector perform' and hiked the price target to 620p from 375p, citing a number of potential catalysts.
The bank argued that whether you are looking at historical or sector-relative valuation, Close Brothers shares screen as cheap.
It noted that the shares have underperformed the sector by around 55% year-to-date.
RBC said the bad news around the Financial Conduct Authority's review of motor finance is now well embedded into consensus and net interest margin and loan growth assumptions are sensible.
"Therefore, we currently see asymmetric risk to the upside, as the market continues to myopically focus on capital, while we see a number of potential catalysts including: i) a softening of Basel 3.1; ii) a Novitas settlement; iii) IRB approval," it said.
"Structurally, it is helpful that CBG's NIM is relatively agnostic to a falling rate environment."
At 1000 BST, the shares were up 8.9% at 530.90p.
Disclaimer & Declaration of Interest
The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.