KBW reiterates 'outperform' rating on Close Brothers
By Iain Gilbert
Date: Thursday 27 Mar 2025
(Sharecast News) - Analysts at Keefe, Bruyette & Woods reiterated their 'outperform' rating and 430.0p target price on merchant banker Close Brothers on Thursday after chief executive Mike Morgan delivered "an excellent presentation" to its sales force.
KBW said key takeaways from Morgan's presentation were that capital was "better than many appreciate", that profitability would likely improve from its "wholly inadequate" H1 return on tangible equity and "clearly has to be in double figures", and that it was confident that franchising offers "a range of growth opportunities".
"CBG trades on 6.0x KBWe adjusted EPS26e and/or 0.35x FY25e tangible book," said KBW.
"There is clearly considerable uncertainty around the outlook, but in a sector where banks routinely trade on >1x tangible book, it is hard to argue that the shares are not pricing considerable downside (discount to tangible book equates to circa £850.0m even after the £165.0m H1 motor finance redress provision."
Reporting by Iain Gilbert at Sharecast.com
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