Berenberg lowers target price on Secure Trust

Berenberg said Secure Trust's recent quarterly results were broadly in line with its expectations, with the company delivering "strong loan growth" in 2022.

However, Berenberg, which reiterated its 'buy' rating on the stock, expects loan growth to slow in 2023 as it tightens credit criteria given the "uncertain economic outlook.

"We have revised our forecasts to account for the latest results, as well as the uncertain economic outlook. Our adjusted-EPS expectations have fallen c6% for FY 2022E and c21-23% for FY 2023E-24E. Outer-year forecasts have fallen, primarily due to reduced expectations for loan growth. We also increase our cost-of-risk expectations, from 1.3% to 1.4% for FY 2023E-24E," said Berenberg.

"To reflect changes to our forecasts, we have revised our price target from 1,820.0p to 1,420.0p per share. Our new price target implies a P/BV (FY 2023E) of 0.8x. Secure Trust’s shares have fallen c47% on a one-year view and the company now trades on 0.4x P/BV (FY 2023E)."

Reporting by Iain Gilbert at Sharecast.com