RBC Capital Markets sees another leg higher for Metro Bank Holdings PLC (LSE:MTRO), with the Canadian bank hiking its price target to 195p from 170p, and reiterating an 'outperform' rating, pointing to a cleaner strategic story, stronger returns and a valuation it says still leaves room for re-rating.
The new target implies roughly 24% upside from the prior close of 156.8p.
RBC said Metro is now “further down the line in the execution of its strategy” and has moved its valuation year to FY28 as a result. The broker’s central argument is that Metro’s turnaround is beginning to show through in the numbers.
"We see room for MTRO to continue re-rating as it executes its strategy and delivers on its targets,” RBC said. The broker added that Metro’s shares have already outperformed larger UK banks by around 35 percentage points so far this year.
But the Canadian bank argued, “there is more to go” as the lender benefits from a higher-for-longer interest rate environment and treasury asset repricing.
The note added: “We are surprised that the MREL news has not been taken more positively by the market,” RBC said.