Panmure upgrades International Personal Finance after recent sell-off

22nd Oct 2014 11:05

The recent drop in the share price of International Personal Finance (IPF) means that the stock is now worth a 'buy', with Panmure Gordon removing its 'sell' recommendation.The upgrade came as the home-credit firm reported third-quarter trading in line with expectations on Wednesday.IPF, which has customers across Eastern Europe and also Mexico, said reported pre-tax profit in the three months to 30 September rose 5% to £34m on the year before, down from the 11% growth seen in the first half, after investment costs of £1.5m and an adverse currency impact of £3.7m."Third-quarter results were overall in line and we have left forecasts (recently revised down) unchanged," said Panmure analysts Keith Baird and Jeremy Grime.However, they pointed out that the stock has fallen 29% since reaching its recent peak of 631p in June, leaving the shares trading at just 10 times estimated earnings for 2015 compared with a multiple of 16 previously."We think the negatives are priced in - potential weakness in Central European economies (principally Poland) via Germany, currency headwinds possibly into 2015, and regulation where IPF has so far adapted successfully," Baird and Grime said."The positives are the lower valuation, positive medium-term growth including Mexico which has massive potential, and the scope to further increase balance sheet leverage [...] and hence return on equity which is 23%."Panmure has hiked its target price from 400p to 540p for the stock, which was trading 5.3% higher at 481p by 11:17.