Shares in Solihull company Paragon Group soared nearly ten per cent after it told the market the group had operated profitably in the third-quarter.
Numis Securities left a “buy” rating on the stock, which rose 5.25p to 65p at the same time the FTSE Small Cap index fell 10.1 points to 2,576.
The mortgage lender said it had continued to operate profitably in line with the management’s expectations during the third-quarter of its financial year.
In response, Numis Securities said it was “encouraged” to see most parts of Paragon performing in line with the first-half. Although the broker still forecasts a deterioration in credit quality associated with the declining value of collateral, it thinks the performance of the core Paragon buy-to-let portfolio has consistently delivered better credit quality than the Council of Mortgage Lenders average.
Leaving an 82p price target on Paragon, Numis said despite its belief that UK property prices remain 40 per cent over-valued, it thinks the market is placing too big a discount on Paragon.