Peel Hunt has upgraded its recommendation on S&U PLC (LSE:SUS) from 'hold' to 'add', raising its target price from 1,500p to 2,000p after the company’s trading update, which pointed to improving momentum across its divisions.
The broker highlighted that both Advantage, the motor finance business, and Aspen, the property bridging arm, are delivering strong progress, with profitability expected to rise compared to last year.
Advantage is outperforming expectations, with loan advances reaching £71 million in the first half of the year and repayment rates returning to nearly 90%.
The recent Supreme Court ruling has provided much-needed regulatory clarity for the sector, particularly benefiting Advantage, which has not offered discretionary commission deals and expects minimal risk from unfair relationship claims.
Aspen continues to perform well despite challenging market conditions, with advances up 15% at £106 million and collections jumping 49%, including a record amount collected in July.
Peel Hunt also noted that S&U’s valuation looks attractive with a price-to-earnings ratio of around 10 times and a price-to-net asset value ratio below one, reflecting strong value.
In afternoon trading, the shares were flat at 1,875p.