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10 Mar 2021 | 13:16

Shore cuts rating on 'too far, too soon' Virgin Money

(Sharecast News) - Virgin Money UK's shares have risen "too far, too soon", Shore Capital said as the broker cut its rating on the bank to 'hold'. In a cautious note about the UK banking sector, Shore said Virgin Money's return to profit in the first quarter was encouraging. Given the improving economic outlook in the UK, Shore upgraded earnings estimates based on lower impairment charges and forecast a small annual statutory attributable profit. It had previously predicted a loss.

A steepening yield curve and opportunities to reprice deposits could allow earnings to surprise on the upside, Shore said. The broker increased its fair value estimate for Virgin Money to 185p a share from 155p.

"But with the shares already above this level we think they have run too far, too soon and so downgrade our recommendation to 'hold' from 'buy'," Shore analyst Gary Greenwood said.

Virgin Money's shares had gained more than 50% in 2021 before Greenwood published his note. The shares fell 4.8% to 190p at 1:31 GMT on Wednesday.



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