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Investing.com - Atlanticus Holdings Corp. (NASDAQ:ATLC), whose stock has surged over 120% in the past year and currently trades near its 52-week high of $69.94, has announced its acquisition of Mercury Financial, a significant credit card issuer focused on near-prime customers, marking its first acquisition in nearly 20 years.
The $162 million cash deal includes additional potential incentives based on the acquired portfolio’s credit performance, according to details released Thursday. Mercury Financial ranks among the top 25 Visa and Mastercard issuers in the United States. The acquisition represents roughly 16% of Atlanticus’s current market capitalization of $1.03 billion.
JMP Securities analyst David Scharf reiterated a Market Outperform rating on Atlanticus with a $78.00 price target following the announcement. According to InvestingPro data, analyst targets for the stock range from $56 to $84, with the company maintaining a "GREAT" overall financial health score. The acquisition is expected to double Atlanticus’s current portfolio size.
The transaction is forecasted to drive "material earnings upside" beginning in 2025, according to management guidance cited by JMP. The deal represents a significant expansion of Atlanticus’s credit card operations.
Based on management’s high-end forecasts for transaction accretion in 2026, JMP calculates that Atlanticus shares are currently valued at 7.3 times their 2026 pro forma earnings forecast.
In other recent news, Atlanticus Holdings Corporation has completed the acquisition of Mercury Financial LLC, significantly expanding its credit card business. This transaction adds 1.3 million credit card accounts and $3.2 billion in credit card receivables to Atlanticus’ portfolio, increasing its total serviced accounts to over 5 million and managed receivables to more than $6 billion. Additionally, Atlanticus successfully completed a private offering of $400 million in senior notes with a 9.75% interest rate due in 2030. The proceeds from this offering are intended to repay outstanding amounts under its recourse warehouse facilities, fund potential acquisitions, and cover related expenses. The notes are guaranteed by certain domestic subsidiaries and governed by an indenture with U.S. Bank Trust Company, National Association as trustee. These recent developments highlight Atlanticus’ strategic efforts to enhance its financial position and expand its market presence.
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