Close Brothers Group PLC (LSE:CBG) shares may have already priced in the good news from its encouraging motor finance update, according to analysts at Shore Capital, who now see limited upside after a sharp rally.
The merchant banking group said earlier it expects a £320 million hit from the FCA’s redress scheme, broadly in line with its existing £294 million provision.
Shore Capital described the update as a moment for investors to “breathe a sigh of relief”, noting the estimate was close to expectations and well within the group’s capital capacity.
The broker said the market is likely to be “materially reassured”, particularly after concerns raised by short seller commentary suggesting a much larger potential liability.
Shares reacted strongly, rising around 19% at the open and extending gains since Shore had previously upgraded the stock.
However, with the price now around 464p, close to its 475p target, the broker has downgraded its recommendation back to 'hold'.
While the redress outcome appears manageable, uncertainty remains.
Shore highlighted the potential for legal challenges to the scheme and claims brought outside the FCA process, which could still alter the final cost.
It said: "We believe it is now appropriate to take some profits, particularly given that underlying operational performance remains weak and significant execution will be required for the group to deliver on management’s financial-year 2028 double-digit [return on tangible equity] target, which we view as stretching."