BofA Securities has initiated coverage of Burford Capital with a buy rating and set a price target of $14.55 for the shares listed in New York, and 1,062 pence for the London-listed shares.
At the time the firm published its research, the $14.55 objective translates to almost 48% upside against a quoted share price of $9.82. BofA noted that this assessment is consistent with data identifying the stock as undervalued on a Fair Value basis.
Valuation and returns
In its analysis, BofA calculates that Burford generates a cash return on tangible equity that is higher than its cost of equity. The firm also points out that Burford is trading at roughly 0.7 times tangible book value, a level below the 1.0 times tangible book value multiple that BofA believes the company should command.
BofA quantified one specific upside scenario tied to litigation outcomes: it estimates that a positive resolution in the YPF case could add value equivalent to 2.3 times market capitalization to Burford’s book value.
Market reaction and outlook
The research house characterized the stock’s slide through 2025 as excessive when weighed against the company’s capacity to generate cash. BofA’s initiation frames Burford as a business with performance that is largely uncorrelated to broader market moves, and one that produces cash returns on tangible equity above its cost of equity.
What to watch
- Progress on the YPF matter, which BofA identifies as a potential source of meaningful upside to book value.
- Movements in the stock’s valuation relative to tangible book value - currently at about 0.7 times per BofA.
- Reported cash generation versus investor expectations, given BofA’s view that the 2025 decline was overdone in light of available cash generation.
This report conveys BofA Securities’ initiation rating and price targets based on the firm’s published research.