Panmure Gordon has reversed its November downgrade of Vanquis Banking Group PLC (LSE:VANQ) on the back of the lender's prelims - although the stockbroker recognises that 'risks remain'.
It has moved 'buy' from 'hold' on shares in the credit cards and loans group, which it values at 75p - around a third more than the stock is worth today at 56p (up 8.5%).
"What is more important by far is the company’s objective of getting back to earning a mid-teens RoTE [return on tangible equity] by 2026," said Panmure in a note to clients.
"We believe that this equates to a business making around £100m of adjusted PBT [profit before tax] and close to 30p of adjusted earnings per share.
"Risks remain high – there are the invidious attentions of a CMC to negotiate – but a potential PER [price-to-earnings ratio] of under two times suggests also that there is more than enough opportunity to offset that risk."