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RBC Capital downgrades Close Brothers to 'sector perform'
(Sharecast News) - RBC Capital Markets downgraded Close Brothers on Monday to 'sector perform' from 'outperform' as it said the motor finance event has played out. It noted the shares are up around 120% year-to-date, and now trade at 0.56x TBV one year-forward for a 5.9% return on tangible equity.
"Our thesis that there would be a positive motor finance Supreme Court (SC) outcome played out, and we have run out of upside," it said.
RBC pointed to the company's full-year results due in September and said management is incentivised to reset expectations lower, in its view.
"Therefore, we downgrade to sector perform and remove our Speculative risk qualifier," the bank said.
"We make no changes to our estimates, but note that our numbers already had included the removal of Winterflood following the disposal announcement."
RBC left its price target on the stock unchanged at 525p.
At 0915 BST, the shares were down 3.1% at 499.92p.
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