Berenberg downgrades Provident Financial after strong run

9th Jul 2014 11:44

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