OneSavings Bank PLC (LON:OSB) was downgraded to ‘hold’ from ‘buy’ by Peel Hunt as the coronavirus ripple effects are expected to hit results to 2021.
Though management did not provide guidance, analysts now estimate “significantly lower” earnings for the next two financial years and slashed the target price to 211p from 470p.
READ: OneSavings Bank confident enough to raise dividend but not issue guidance
The broker expects loan balances to drop by 7% this year and by 5% in 2021, reducing revenues and profits, but supporting capital ratios and reducing pressure on funding requirements.
However, the challenger bank’s balance sheet is “strong”, analysts say, thanks to plenty of liquidity and “robust” credit metrics.
“We expect OSB to remain profitable, with the potential to deliver attractive longer-term returns,” they concluded.
Shares gained 5% to 204.4p on Tuesday at noon.