Broker tips: Vanquis Banking, Whitbread

29th Oct 2026 14:49

(Sharecast News) - Analysts at Berenberg cut their price target on Vanquis on Thursday, lowering it from 145p to 80p after a material downgrade to earnings and returns prompted by worsening macro conditions and rising customer insolvencies.

Berenberg kept its 'buy' rating but said delivery of the group's mid‑to‑high‑teens return on tangible equity ambition was now likely to take longer than previously expected.

Vanquis's third‑quarter update highlighted a tougher backdrop, with higher individual voluntary arrangements driving up impairments in credit cards and pushing year‑to‑date risk‑adjusted marginz down to 8.5% from 9.3% at the end of H1.

Although gross interest‑earning balances rose 5% to £3.2bn and net interest margins held broadly steady at 14.8%, the increased cost of risk forced a step‑up in IFRS 9 provisioning and contributed to a small quarterly loss. Berenberg said management had already begun moderating loan‑book growth and accelerating cost savings, but the macro hit outweighed the benefit of these actions.

The German bank expects challenging conditions to persist into FY27, with cost‑of‑living pressures continuing to weigh on household finances. Loan‑book guidance for FY27 has been trimmed to £3.4bn from £3.7bn, while additional cost reductions were now assumed through FY28.

As a result, Berenberg has shifted its forecasts "one year to the right", cutting FY26 earnings per share from 3.1p to a 2.9p loss, and slashing FY27 EPS by 79% to 2.9p. ROTE expectations have also been reduced to ‑2.2% for FY26 and 2.2% for FY27, though the common equity tier one ratio was still seen at around 12% across the forecast horizon.

Deutsche Bank hiked its target price on Whitbread on Thursday, raising it from 2,530p to 2,730p and reiterating its 'hold' rating after the UK budget introduced a new real‑terms cap on business rate increases for parts of the retail, hospitality and leisure sector.

The broker said hotels had faced a disproportionate jump in rateable values in 2026 - more than 100% - creating a significant earnings headwind for Whitbread and its peers. It highlighted that the increase was the single biggest factor behind guidance being downgraded and a key drag within the group's five‑year plan.

Deutsche Bank noted that the government's new cap on business rate rises for qualifying RHL properties was unexpected and could ease some of that pressure. However, it also flagged ambiguity in the budget documents over what "qualifying" means. If eligibility is restricted to properties with rateable values below £500,000, a number of larger Premier Inns would likely be excluded, limiting the benefit for Whitbread.

Even so, Deutsche Bank said the measure improves visibility on future cost inflation and supports its upgraded forecasts, prompting the target‑price increase.

Reporting by Iain Gilbert at Sharecast.com