Virgin Money's growth prospects not reflected in share price, Barclays says

Following the company's latest update, they told clients the lender's capital position was "more than sufficient" to support strong double-digit loan growth with a capacity to absorb higher regulatory requirements.

In a research note dated 18 October, they also pointed out that Virgin had reiterated its guidance for margins, even in the face of mortgage pricing pressures, which they nevertheless expected to abate.

Together with the continued benefits from opertaing leverage and modest increases in provisions, they estimated Virgin could deliver a 19% compound annual rate of growth in earnings over three years and an 11% increase in tangible book value with returns on tangible equity value of 13%.

They expected the firm to provide more colour on all of the above at its 16 November capital markets day, ahead of which they reiterated their 'overweight' recommendation and 360p target price.

"We dont't believe [the above] are reflected in the 7.0 times estimated 2018 earnings multiple or the 1.0 times tangible multiple."