Berenberg raises target price on OSB Group

Analysts at Berenberg raised their target price on financial services firm OSB Group from 750.0p to 800.0p on Monday, stating the group was "sustainably strong" and "unsustainably cheap".

Berenberg stated OSB Group generates a sector-leading return on tangible equity of more than 20%, with the sustainability of these returns being underpinned by "structurally growing and cyclically-resilient demand for its lending", as well as its "significant pricing power and strong asset quality".

The German bank, which reiterated its 'buy' rating on the stock, noted that despite the "increasingly proven sustainability" of OSB Group's returns, and an annual total yield of roughly 15%, the stock trades on just 4.4x its estimated full-year 2024 earnings per share.

"This is unsustainably cheap, in our view, and our price target implies circa 65% upside," said Berenberg. "Considering our expectations for a circa 20% RoTE, 7-8% dividend yield and annual buybacks of circa 8%, OSB Group is materially undervalued."

Reporting by Iain Gilbert at Sharecast.com