Outstanding Q1 results from Aldermore, Investec's Ian Gordon says

Aldermore Group

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Shares in Aldermore are far too cheap, said analysts at Investec, describing the challenger bank's first quarter 2017 performance as "exceptionally strong" and "outstanding".

Banks

4,677.17

15:45 15/11/24

1.24%

57.25

FTSE 250

20,508.75

15:45 15/11/24

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FTSE 350

4,453.56

15:45 15/11/24

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FTSE All-Share

4,411.85

15:45 15/11/24

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Investec's Ian Gordon reiterated his 'buy' recommendation and 290.0 target price.

Gordon said he welcomed the skew in the lender's growth towards "low-risk" buy-to-let mortgages even though that is where gross yields are below the group average.

The analyst adds that the move down the risk curve means that consensus impairment forecasts remained too high.

Trading on 8.1 times analysts' estimates for the lender's 2017 profits, the shares remained "by far" the cheapest under his coverage.

"It is continuing to deliver very strong growth, consistent with (we think) RoTEs of 17-19% through 2017-2019e."