Shore Capital sees re-rating at Vanquis Banking if targets are met

(Sharecast News) - Shore Capital has placed a 'buy' rating on Vanquis Banking Group, saying it now sees 25% upside to its 150p target price after a period with the stock under review. 2025 results from the company, published on 26 February, demonstrated a "a clear recovery in financial performance, as expected, with a return to profitability, stronger-than-expected balance growth and sharply improved efficiency, prompting upgraded volume and cost guidance, albeit alongside lower margin assumptions", Shore Capital said.

The broker said that delivery risk remains to achieve Vanquis's targeted progress to a mid-teens return on tangible equity - which improved to 2.3% in 2025 from -32.1% in 2024.

Hitting this target "will require continued strong execution, particularly in turning Vehicle Finance profitable, offsetting mix-driven margin dilution with volume and efficiency gains, sustaining cost discipline as the group scales, and fully realising the operational benefits of Gateway [its tech transformation programme]", Shore Capital said.

However, if this is achieved, then the current valuation - a price-to-tangible net asset value multiple of 0.8x on 2026 estimates - is "undoubtedly too low and a further re-rating should occur", the broker said.

Vanquis shares were down 4.5% at 114p by 1244 GMT.