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Virgin Money for recovery without the V

Virgin Money is more resilient and more capable of recovery than the derisory valuation suggests
October 1, 2020

In drawing attention to Virgin Money (VMUK) shares, we expect nothing less than raised eyebrows. We’ll freely admit to our own considerable doubts about the bull case for the banking sector, within which the 2018 merger of the downtrodden Clydesdale & Yorkshire Bank (CYBG) and the over-egged cache of the Virgin brand isn’t exactly a renowned world-beater. After all, the fruits of that combination – struck when CYBG and Virgin shares changed hands at 306p and 371p, respectively – proved underwhelming long before this year’s events threw all economic and business projections wildly off course.

IC TIP: Buy at 73.8p
Tip style
Speculative
Risk rating
High
Timescale
Medium Term
Bull points

Merger synergies

Bottoming net interest margin

Quality loan book

Cheap vs peers (trailing earnings)

Pivot to SMEs

Bear points

Weak RoE

Credit risks from bad Brexit

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