Deutsche Bank starts Close Brothers at ‘buy’, shares surge.
Deutsche Bank initiated coverage of Close Brothers on Friday with a ‘buy’ rating and 610p price target as it said the overhang on the shares has opened "considerable value".
Close Brothers Group
05 July 2024 09:54:02
Source: Sharecast
"We expect the outcome of the FCA motor finance review to be manageable; capital to remain within range; ROTEs to trend higher; and the discount to eventually unwind," it said.
"At 0.5 x TBV Close Brothers is worth the risk."
DB noted that the shares year-to-date have been driven by the FCA review. It said the shares have overly discounted this risk.
"It we take the PPI ruling as precedent and factor in differential risk across the motor finance lending portfolio the impact could be negligible," the bank said.
Deutsche Bank factors in £150m conduct charge, which it said was manageable without too much additional adjustment to the financial outlook.
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