OSB Group PLC's (LSE:OSB) latest numbers were not very good, suggests broker KBW.
A pre-provision profit of £240m from the specialist mortgage lender was down by 7% and completely due to lower net interest income (both margins (principally) and volumes missing expectations).
KBW adds the numbers raise questions about the attractiveness of the UK Buy-to-Let (BTL) sector in the current environment.
“That said we upgraded the shares at the start of the year in anticipation of falling rates, which should provide a welcome tailwind to the broader BTL market."
This has clearly yet to come to pass, adds the broker, but “logic would suggest that as falling rates gather momentum many of the current problems facing the business will start to unwind”.
The shares are not expensive on an earnings basis, KBW adds, and with an implied total FY24-25 cash return of c.33%, its recommendation is to buy on the recent weakness - the sahrs fell 18% yesterday on the results.
KBW has an outperform rating and a 570p price target target.
Shares were flat at 386p.