Canaccord reiterates 'buy' rating on Paragon
By Iain Gilbert
Date: Thursday 13 Jun 2019
(Sharecast News) - Analysts at Canaccord Genuity on Thursday reiterated their 'buy' rating on attractions design and fit-out business Paragon, stating the group's interim results a day earlier demonstrated their "positive thesis in action".
Canaccord noted that despite Brexit-related uncertainty, especially during the second quarter, Paragon's net loan book grew 3.3% during the half, while net interest margin improvement, something the analysts had previously identified as "a key differentiating feature" for the group versus its peers was evident - reaching 224bps compared to the 221bps recorded for the whole of 2018.
"This was driven by growth in the higher margin commercial portfolio and helpful long-term dynamics within the mortgage book," pointed out Canaccord.
The Canadian broker said Paragon was "well-positioned for the medium-term" as it stood by its stance on the firm as a 'conviction buy' and upped its target price a touch to 500p.
"PAG trades at 1.0x FY19 P/BV, falling to 0.9x FY20 P/BV, for an average 12.3% ROE through our forecast horizon, which we would expect to continue to improve thereafter. We see this valuation as undemanding given PAG's positive attributes."
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