Analysts at Berenberg initiated coverage of subprime lender Vanquis on Monday with a 'buy' rating and 165p price target.
Source: Sharecast
Berenberg said that, thanks to management actions over the past two years, Vanquis was now "a cleaner, lower-risk, higher-profit business", leaving it well placed to take advantage of market opportuniies.
The German bank stated that a 2027 price-to-tangible book value per share ratio of 0.7x and a price-to-earnings ratio of 5.0x suggest that Vanquis has not received "credit for progress made, never mind the attractive returns to come".
"We use a multiples-based methodology to value Vanquis. The shares trade on a CY27 P/TBVPS of only 0.7x, a discount to peers on 0.9x, and fail to reflect the fact that returns will exceed the peer group average next year and that the sector itself trades on a discount to its own historical average," said Berenberg.
"While some faith is required in Vanquis reaching a mid-teens ROTE, this is an experienced management team, and the FY 2025 results provide a strong proof point that the strategy will be delivered."
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