logo-loader
viewVirgin Money UK PLC

CYBG easier as Investec cuts to ‘hold’ from ‘buy’, with shares having rallied strongly since late December

"For the patient investor, we think CYBG offers further upside potential, but after a 26% return since 27 December, on a 12-month view, we see better value elsewhere," Investec's analysts said in a note

Yorkshire Bank
The City broker set a new target price of 230p on CYBG shares, which in afternoon trading were changing hands at 215.40p each

Investec Securities has cut its rating for CYBG PLC (LON:CYBG) to ‘hold’ from ‘buy’, with shares in the merged challenger bank having rallied strongly since late December, as it sees "better value elsewhere" on a 12-month view.

The City broker set a new target price of 230p on the stock, which in afternoon trading were changing hands at 215.40p each, down 0.8%

READ: Barclays upgrades Virgin Money owner CYBG to 'equal weight' but still prefers Lloyds and RBS

In a note to clients, Investec’s analysts noted that, following the merger between the Clydesdale Bank and Yorkshire Bank owner with Virgin Money which concluded last October, full synergies are not expected until the 2022 financial year.

The analysts said the forecast progress with some aspects of the merger integration will be relatively slow, while there will be continued pressure on net interest margin.

They pointed out that CYBG missed out on initial awards from the Royal Bank of Scotland Group PLC (LON:RBS) alternative remedies scheme, but it has applied under the second round and could also make use of the incentivised switching scheme, which will have £350mln of money from RBS to help redistribute SME customers around to challenger banks.

The analysts said: "For CYBG, there is a clear opportunity to secure new liability-rich customer relationships, accelerate growth and rebalance the group away from mortgages."

They added: "For the patient investor, we think CYBG offers further upside potential, but after a 26% return since 27 December, on a 12-month view, we see better value elsewhere."

The analysts said Investec’s preferred name in the banking sector is Charter Court Financial Services Group PLC (LON:CCFS) - which in March launched an all-share merger with Onesavings Bank PLC (LON:OSB) - where it retains a 'buy' rating.

Quick facts: Virgin Money UK PLC

Price: 216.6 GBX

LSE:VMUK
Market: LSE
Market Cap: £3.11 billion
Follow

Add related topics to MyProactive

Create your account: sign up and get ahead on news and events

NO INVESTMENT ADVICE

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...

FOR OUR FULL DISCLAIMER CLICK HERE

Watch

Things coming together nicely in Greenland, says Bluejay Mining's CEO

Rod McIllree, Bluejay Mining PLC’s (LON:JAY) chief executive, tells Proactive that all three of its projects in Greenland are shaping up nicely with plenty of interest from mining giants. Dundas is the flagship and here a bulk sample of mineral sands has been shipped to a Rio Tinto facility...

1 day, 1 hour ago

RNS

Director/PDMR Shareholding

3 days, 22 hours ago

Director/PDMR Shareholding

3 days, 22 hours ago

Holding(s) in Company

4 days, 3 hours ago

Director/PDMR Shareholding

1 week, 4 days ago

Director/PDMR Shareholding

1 week, 4 days ago

Total Voting Rights

1 week, 5 days ago

2 min read