Brokers Charles Stanley Securities and Daniel Stewart & Co issued upbeat notes on S & U PLC (LSE: SUS) in response to the group’s trading statement yesterday, reiterating their respective ‘buy’ ratings for the home credit and motor finance specialist.
S & U said it was trading in line with market expectations for the full year to the end of January as both of its businesses performed well and continued generating cash.
The group’s home credit operations have been performing in line with expectations as debt quality and impairment levels are improving. The division currently accounts for two thirds of S&U’s profits. Debt quality has also improved at the group’s motor finance business Advantage, where trading performance has also been in line with budget.
Daniel Stewart said the trading statement gives the broker comfort in its full-year 2010 forecasts. It reiterated its 575 pence price target, which gives an upside of around 31 percent.
It continues to like S&U for its long track-record of resilient trading, the improving opportunity in the non-standard lending market and for its high dividend yield, the broker added. “We keep forecasts and target price unchanged for now and await the update in early February 2010, which will provide guidance on the crucial Christmas trading period.”
Charles Stanley reiterated its 500p target price, noting that S & U is continuing to perform well. “With more cautious underwriting and an emphasis on credit quality, cash generation has been strong, while S&U is well placed for when economic conditions improve,” it said.