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Berenberg downgrades Provident Financial after strong run
09-07-2014 11:44
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Berenberg has lowered its recommendation for financial services firm Provident Financial from 'buy' to 'hold', saying that "catalysts [have] played out for now" at the UK non-standard lender.
The downgrade comes after a 40% jump in the share price so far in 2014.
"We remain positive on PFG's long-term growth prospects, but on 15 times [estimated earnings for] 2015 we feel that valuation now better captures this upside.
"Until there is more clarity on the size of the Satsuma and guarantor loan businesses, we see current levels as a good opportunity to take profits and await a better entry point."
The broker highlighted three key risks to the investment case at Provident, namely the threat from regulation, a struggling Vanquis business in Poland and rising interest rates in the UK.
Berenberg maintained its target price for the shares at 2,050p.
The stock was down 2.3% at 2,149p by 11:31.
BC
The downgrade comes after a 40% jump in the share price so far in 2014.
"We remain positive on PFG's long-term growth prospects, but on 15 times [estimated earnings for] 2015 we feel that valuation now better captures this upside.
"Until there is more clarity on the size of the Satsuma and guarantor loan businesses, we see current levels as a good opportunity to take profits and await a better entry point."
The broker highlighted three key risks to the investment case at Provident, namely the threat from regulation, a struggling Vanquis business in Poland and rising interest rates in the UK.
Berenberg maintained its target price for the shares at 2,050p.
The stock was down 2.3% at 2,149p by 11:31.
BC
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Provident Financial (PFG) share price |
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