Finance provider FlexiGroup (FXL) has affirmed its growth targets as it undergoes a re-balancing of its business mix. Brokers note the outlook for FY17 has been re-based and appears more realistic. Offsetting stronger growth some headwinds remain apparent, including the cost of funds and increased impairments as well as volume growth in Certegy and continued pressure on the profitability of consumer leasing.
Financial services business Flexigroup (FXL) is tidying up. The company intends to divest or discontinue poorly performing segments and focus on its core operations. While one-off charges have led to a mild downgrade to FY16 forecasts, brokers believe more of the risks are now priced into the stock.
Buy rating retained as Citi analysts continue to believe the risk remains to the upside, with FY18 release cementing their confidence what we are witnessing at FlexiGroup might be a successful turnaround.
Citi analysts have been biding their time, waiting for that trigger that would allow for the gap between share price and valuation to close. It appears they now think yesterday’s interim report release might be that trigger. Upgrade to Buy from Neutral.
First half results were in line with estimates. UBS suspects confidence in the second half is building and the company’s plans should support an improved FY19, when the benefits of restructuring should emerge. Guidance is reaffirmed for FY18.
Flexigroup’s result was in line with the broker, at the lower end of the guidance range. FY18 guidance features organic growth offset by material cost increases for Certegy and further investment in Oxipay and Ireland. Growth is expected to return in FY19.