Specialist lenders Funding Circle Holdings PLC (LSE:FCH) and Secure Trust Bank PLC (LSE:STB) were initiated with 'buy' ratings at Berenberg, while S&U PLC (LSE:SUS) was given a 'hold' recommendation, with the analysts noting growth prospects for the three companies.
SME lender Funding Circle was given a price target of 120p a share, while Secure Trust could reach 1,820p, the analysts including Alexander Bowers wrote in a note to clients on Monday. That suggests the stocks could rise by 79% and 50% respectively.
Motor finance provider S&U was given a target price of 2,660p, indicating upside of almost 10%. The analysts noted the company’s low gearing and increased earnings and dividends each year over a decade.
“The UK lending market provides opportunities for specialist finance firms to grow in profitable niches,’’ the analysts wrote. “Specialist markets are typically underserved by mainstream lenders, which focus on the residential mortgage market and larger businesses.”