Just Group PLC (LON:JUST) got a boost on Tuesday as Deutsche Bank upgraded its rating for the home equity release specialist to ‘hold’ from ‘sell’ as UK house prices appearing more stable.
The German bank also raised its target price for the FTSE 250-listed stock to 55p from 53p, with the shares currently trading at 45.90p, up 3% on Monday’s close.
READ: Just Group capital improves but solvency declines as house prices pose risk
In a note to clients, Deutsche Bank’s analysts said: “The key to Just’s share price is the outlook for its solvency position, which in the near-term is essentially a function of UK house prices.”
They added: “In this respect, somewhat to our surprise, the latest data both from Nationwide and Rightmove appear to suggest that prices are stabilising once again, helped by a post-lockdown surge of pent-up demand and a temporary suspension of stamp duty.
“Though we still forecast some house price weakness next year once the near-term stimulus is removed, the net effect is that Just Group now looks more able to avoid the sharp contraction in its solvency ratio that we were previously forecasting. Specifically, we now forecast an end-2020 solvency ratio broadly stable YoY at 140% (previously 121%e).”
“Reflecting this more benign outlook, we lift our recommendation from Sell to Hold,” the analysts concluded.