U.S. stocks edge higher; solid earnings season continues
On Friday, JMP Securities adjusted its outlook for Atlanticus Holdings Corp. (NASDAQ: ATLC), a financial technology company currently trading at $51.28. The firm’s analyst, David Scharf, revised the price target downward to $72 from $75, while sustaining a Market Outperform rating for the stock. This target aligns with the broader analyst consensus, as InvestingPro data shows analyst targets ranging from $45 to $90. The revision follows detailed discussions with the company’s management, leading to an updated forecast that factors in increased investments in personnel.
The company’s management has indicated a positive macroeconomic outlook for its target customer base and has successfully navigated through the recent changes in late fee regulations. These developments have provided management with additional confidence in the potential for growth and yield outperformance in the near term, thanks to strategies implemented to mitigate the impact of late fees. This confidence is reflected in management’s aggressive share buyback program, as noted in InvestingPro’s analysis, which shows strong financial health with a current ratio of 8.69 and impressive revenue growth of ~13% in the last twelve months.
The decision to lower the price target reflects a change in the target multiple on projected 2026 earnings per share (EPS), moving from 11 times to 10 times. This adjustment aligns with the recent contraction in market and peer valuations. Despite the reduced price target, the Market Outperform rating suggests that JMP Securities still views Atlanticus Holdings favorably relative to the market.
Atlanticus Holdings is expected to ramp up its business investments, catching up after a period of cautious cost management. The management team has expressed confidence in the company’s growth trajectory, citing recent developments with the Consumer Financial Protection Bureau (CFPB) and observing favorable credit and spending patterns among its borrowers. These factors contribute to the company’s positive outlook and its strategic positioning for future performance.
In other recent news, Atlanticus Holdings Corp. reported fourth-quarter earnings that exceeded expectations, with notable improvements in revenue and key metrics. The company achieved a net income of $27 million, surpassing JMP Securities’ estimate of $23 million, and posted earnings per share of $1.42, beating the anticipated $1.25. Analysts at Keefe, Bruyette & Woods highlighted Atlanticus’s strong revenue trends and resilient credit performance, despite an increase in expenses. They maintained a Market Perform rating, adjusting the price target to $52. JMP Securities also reaffirmed a Market Outperform rating with a $75 price target, citing positive fair value adjustments and improving credit trends. The shift towards point-of-sale retail cards, which offer lower yields and loss rates, contributed to the company’s results. Atlanticus’s net interest margin ratio outperformed projections, attributed to stronger-than-expected revenue and credit trends. Analysts remain confident in the company’s growth prospects, supported by factors such as moderating inflation and low unemployment rates. The partnership with Synchrony is expected to foster future collaborations, enhancing Atlanticus’s strategic position.
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