Pepper Money has not been overlooked in the recent de-rating of non-bank lenders but the market responded well to its trading update, Credit Suisse notes. Pepper expects a 2021 net interest margin in line with prospectus forecast.
This is an impressive outcome, the broker suggests, given intense competition and record originations. Yet current valuation suggests the market is still expecting a severe hit to NIMs next year along with all lenders.
Credit Suisse disagrees and maintains Outperform after dropping its target to $3.05 from $3.35.
Sector: Banks.
Target price is $3.05.Current Price is $2.30. Difference: $0.75 – (brackets indicate current price is over target). If PPM meets the Credit Suisse target it will return approximately 25% (excluding dividends, fees and charges – negative figures indicate an expected loss).
