Virgin Money Share Price Went Parabolic: Is it a Buy?

The Virgin Money share price went parabolic on Monday after the company published strong financial results. The VMUK stock jumped to a high of 170p, which was the highest point since May this year. It has jumped by almost 42% from the lowest point in October.

Why did VMUK pop?

Virgin Money is a leading British bank that operates its eponymous brand together with Clydesdale Bank and Yorkshire Bank. It has over 6.5 million customers. Like Lloyds Bank, Virgin Money offers services like credit cards, mortgage financing, ISAs, investments, and insurance. It is the sixth biggest bank in the UK.

The Virgin Money stock price went parabolic after the company published strong results and boosted its dividend payouts. The firm said that it will buy back stock worth 50 million pounds and increase its dividend payout to 7.5p. This happened after its pre-tax profit surged to 595 million pounds in financial year 2022.

Virgin Money said that its credit card sales jumped by 49%, which is a good thing in a high-interest rate environment. Its market share in the credit card business rose to 8%. Further, the company boosted its fintech credentials by launching buy now, pay later (BNPL) solutions that attracted over 40k customers in the waitlist.

Meanwhile, its mortgages book growth grew by 1.2% in the final half of the year while its business customers book returned to growth in the final half. The company is on track to deliver 175 million pounds in gross savings through its digitizing strategy. With interest rates rising, the company’s net interest rate income rose to 1.52 billion pounds.

So, is Virgin Money a good investment? VMUK is a good defensive company with a strong balance sheet and runway for growth as interest rates rise. It is boosting its dividends and buybacks while its mortgage business is in a slow growth. The only risk for the company is that the UK economy is slowing.

Virgin Money share price forecast

The daily chart shows that the VMUK stock price has been in a strong bullish trend in the past few weeks. The rally gained steam on Monday after the company published its financial results. As it rose, the company moved above the important resistance level at 160.20p, the highest point on September 13 and August 12. 

The 25-day and 50-day moving averages made a crossover while the Relative Strength Index (RSI) moved to the overbought level. Therefore, the Virgin Money stock price will likely keep rising as buyers target the key resistance at 180p. A drop below the support at 160.20p will invalidate the bullish view.

Virgin Money share price