ShoreCap says OSB Group share price drop an 'overreaction'

Analysts at ShoreCap stood by their 'buy' recommendation for shares of OSB Group despite the lender's unscheduled 6 July update.

That update saw them cut their estimate for OSB's full-year 2023 net interest income to £170m, for a 30% reduction in their estimate for the group's earnings per share to 70.2p.

The ordinary dividend payout was therefore now seen coming in 13% lower at 35.0p.

In particular, they noted that the reduction was the result of a "technical accounting adjustment" that would impact revenue recognition.

It would not, however, flow out to outer-year forecasts, they added.

So while their 2024-25 net interest margin forecasts were lowered from 3% to 2.85% and those for EPS and DPS by -5%, they judged OSB's fundamentals to be intact and said the ensuing share price drop had been an overreaction.