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Grime- skint wouldbe ftb

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Merrill analyst who on Friday morning gave a target price of 913p for NR!

The stock is trading at 1.1x 2008e tangible book value for an expected RoE of 18%. Moreover, unlike US mortgage players where there remain doubts as to the book value from mark to market hits from revaluation of the sub-prime portfolios, Northern Rock is a prime lender with negligible intangible assets. If we were to consider Northern Rock as a closed book in run-off with a half-life of three years on its mortgage book/asset portfolio, this would suggest a fair present value of 872p on the stock, a 27% premium to the current share price. Our Price Objective is 913p, based on a target multiple of 9x 2008E.

PM: The risks to our Price Objective are a more prolonged credit market closure than expected, and a macro downturn in the UK which would lead to higher provisions.

These City high-fliers are clearly worth every penny of those salaries and sky-high bonuses!

http://ftalphaville.ft.com/blog/2007/09/14...7/markets-live/

:rolleyes:

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Merrill analyst who on Friday morning gave a target price of 913p for NR!

These City high-fliers are clearly worth every penny of those salaries and sky-high bonuses!

http://ftalphaville.ft.com/blog/2007/09/14...7/markets-live/

:rolleyes:

That Alphaville discussion is very enlightening. Certainly even the current 5% premium to their 460p valuation looks overvalued compared to the real book value- which, let's not forget, is declining by £1bn a day as the deposits run.

Prediction: Northern Rock shares slide below 400p tomorrow.

And that Merrill analyst, classic stuff. I just can't imagine how embarrassing that must be.

Edited by Mikesev

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