Funding Circle Shares: Here’s Why This Analyst Sees an Attractive Entry Point

Cavendish reiterated a Buy rating on Funding Circle (LON: FCH) on Friday, arguing in a note that the recent slide in the small-business lender’s shares has opened up an attractive entry point.

Analyst Rahim Karim kept his 275-pence price target on the stock, which trades at about 189 pence after falling more than 18% over the past week, though it remains up close to 46% so far this year.

Karim said the company’s first-half results offered “further evidence of the quality and scalability of Funding Circle’s platform,” with both its Term Loans and FlexiPay businesses delivering strong growth, rising customer engagement and improving profitability.

He noted management had upgraded full-year guidance and signaled that current performance is tracking toward the upper end of the group’s medium-term targets.

While the planned chief executive succession introduces some uncertainty, Karim believes the extended transition through September 2027 and the depth of the wider management team should help limit execution risk.

As a result, he feels the immediate share-price reaction “creates an attractive entry point” for investors focused on the group’s growth and cash generation.

The analyst pointed to Funding Circle’s capital-light model, strong balance sheet and cash generation, and said he sees the company well placed to deliver toward the top end of its revenue guidance. If achieved, that would imply unrestricted free cash flow of more than £100 million, he added.