A strong buy-to-let property sector is helping specialist lender Paragon Group to keep its financial performance in line with expectations.

An upbeat trading statement yesterday resulted in at least two analysts upgrading prospects for the Solihull company's shares.

Numis Securities lifted its target price to 500p from 425p and improved its rating of the stock from "reduce" to "hold".

Bear Stearns, which takes a bearish "underperform" view of Paragon, raised its fair value estimate for 2005 to 503p from 480p, and to 528p from 503p for next year.

It said the upgrade was due to yesterday's better-than-expected statement but still kept its underperform rating.

"We remind investors that our recommendation was not based on short-term trading performance but longer-term concerns," it said in a briefing note.

Paragon - ahead of the end of its financial year on September 30 - said: "Trading activity has strengthened over the course of the financial year after a comparatively slow first half, with loan advances in the second half of the year expected to be significantly ahead of first-half volumes."

The company said the improvement was due to its buy-to-let division, where the second half would be "well ahead" of the first compared to 12 months ago.

Credit quality remained "exemplary" and the pipeline of mortgage loans awaiting completion was greater than six months ago, auguring well for next year.

Its customer base mainly consists of experienced landlords with portfolios of ten and more properties

Paragon said the outlook for landlords was positive and predicted the recent reduction in interest rates and the prospect of more to come would prompt them to build their portfolios.

Against this backdrop Paragon said it was putting more focus on buy-to-let business with a smaller proportion of total lending directed at consumer finance, where advances in the second half were expected to be similar to the first half.