Funding Circle Holdings PLC (LSE:FCH) shares were sent skywards on Thursday after the commercial lender posted what analysts said would be the first of a string of improving profits.
Deutsche Bank noted a £0.5 million pre-tax profit over the first half, against a £7.4 million loss previously, which meant Funding Circle had hit an inflection point “earlier than we expected”.
“We expect profits to expand here on out,” Deutsche added, with free cash flow to follow “shortly”.
Expectations had been for a £5 million first-half loss, according to analysts from Stifel’s KBW, which highlighted better-than-anticipated fee income from the firm’s FlexiPay.
Transactions using the line of credit product had soared from £90 million to £226 million over the first half of the year, aiding a 32% increase in revenue to £79.1 million.
Deutsche noted that alongside growth in term loan originations, this left Funding Circle with a higher-than-expected unrestricted cash position, allowing for its new £25 million buyback.
“The elevated share buyback programme [is] a clear statement of intent that shareholders will also benefit,” KBW added, reiterating an ‘outperform’ rating and 115p share price target.
Deutsche hiked its price target from 170p to 180p following the report and repeated a ‘buy’ rating.
Shares climbed 23.8% to 122.55p on Thursday.