The broker noted that Close Brothers shares have fallen back towards 400p, underperforming the wider sector despite no meaningful deterioration in the investment case.
"Motor finance uncertainty continues to weigh on sentiment, but recent legal and regulatory developments appear largely procedural, while management has made no further adjustment to its £320m provision since May," it said.
"With the shares trading on an FY26F P/TNAV of just 0.5x and with management targeting a double-digit return on tangible equity by FY28F, we believe investors are adequately compensated for the risks."
At 1030 BST, the shares were up 4.5% at 426p.