Specialist lender Paragon (PAG) rallies almost 8% to 407.95p, heading up the FTSE 350 leaderboard in afternoon trading. Investor enthusiasm is being driven by a £50 million share buy-back programme, announced on the back of a full year earnings report which otherwise looks in-line with expectations.
Profit before tax rose 17% to £122.8 million last year, driven by an improving performance in the group's debt purchase business Idem Capital as well as lower provisions for impairments. Idem buys and services books of mortgages and unsecured loans.
'We believe Paragon’s valuation is attractive, especially in light of today’s results [and the] positive momentum in the business,' writes analyst Peter K. Lenardos at Canadian bank RBC Capital Markets.
Lenardos reckons Paragon can buy back as much as 4% of its diluted share count with the £50 million set aside. This would help juice return on equity, which came in at 10.7% in 2014 versus 10.5% a year earlier and remains one of Paragon’s weak points relative to peers. Paragon also reported progress in its new banking unit.