Berenberg slashes Burford Capital target price following US court reversal

(Sharecast News) - Analysts at Berenberg slashed their target price on financial services firm Burford Capital from 1,600p to 500p on Monday following the group's announcement that the US Court of Appeals for the Second Circuit had reversed the original judgement in favour of Petersen and Eton Park, the two claims it had financed in relation to Argentina's nationalisation of energy firm YPF in 2012.

Berenberg noted Burford's next steps now include a potential appeal court rehearing, a review at the Supreme Court, in the US, or the commencement of international arbitration against Argentina.

"In the absence of information pertaining to the remaining fair value of the case, we write the carrying value down to zero in our estimates," said Berenberg, which kept its 'buy' rating on the stock.

The German bank did note that while covenants were now exceeded, it also said the only restriction was that Burford cannot incur additional debt.

"The core portfolio is funded and where we still see a lot of value," said Berenberg. "The core portfolio (86%) and asset management business (14%) are still worth £5/share on our estimates."

Reporting by Iain Gilbert at Sharecast.com