The City broker dropped Amigo to ‘sell’ (from ‘hold’) after chopping its price target to 230p (from 270p) given the “uncertain” economic outlook.
Shares fell 4% in afternoon trading to to 264p, valuing the firm at £1.2bn.
At the end of May, the FTSE 250 company reported a 38% jump in full-year profits, which was “slightly ahead” of Shore Cap’s forecasts.
The number crunchers were also pleasantly surprised by the 9.32p Amigo paid out in dividends, equal to 50% of the profit.
That was a higher proportion than they had anticipated, which they said reflected “strong underlying cash generation”.
But that’s all in the past, and Shore Cap isn’t too excited by what it sees going forward, with increased red tape and economic uncertainty weighing on their assessment of the stock.
Outlook hardly enthralling
“While performance was strong, the outlook is perhaps less so reflecting the increased regulatory spotlight on the guarantor lending sector and a more uncertain macroeconomic environment,” read a note to clients.
“Consequently, we have trimmed our forecasts but still see risk to the downside here. With 17% downside to our revised fair value of 230p (previously 270p), we cut our recommendation to ‘sell’ (from ‘hold’).”
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