Berenberg lowers target price on S&U

3rd Oct 2022 09:23

(Sharecast News) - Analysts at Berenberg lowered their target price on motor finance and bridging lender S&U from 2,660.0p to 2,180.0p on Monday but said the group had still managed to deliver a "solid" set of results given macro headwinds.

Berenberg said S&U's interim results, published on 27 September, were ahead of forecasts for the half-year in terms of both revenues and earnings per share.

The German bank, which maintained its 'hold' rating on the stock, stated that despite "uncertain economic conditions", S&U had continued to perform strongly in both its motor finance and property bridging finance businesses.

"Both of S&U's divisions performed strongly during the half-year. Advantage Finance originated circa 11,800 new loans, up 22% compared to H1 2022 and slightly ahead of our expectations (c11.5k). Meanwhile, Aspen Bridging also reported a rise in origination volumes (+10% versus H1 2022), while it has also developed new products, including a bridge-to-let designed for smaller developers," said the analysts.

Berenberg also said it had opted to revise its forecasts going forward, primarily to account for the impact of the macroeconomic environment and the interim results.

"We slightly raise our revenue and EPS expectations for FY 2023, given the strong start to the year. Considering the current macroeconomic environment, our revised forecasts for outer years reflect higher loan loss provisions, operating expenses, and financing costs, as well as a larger loan book as S&U deploys the additional funding facilities that are now available to it."

Reporting by Iain Gilbert at Sharecast.com