Canaccord maintains EZCORP stock buy rating and $24 target

On Wednesday, Canaccord Genuity sustained a positive outlook on EZCORP (NASDAQ:EZPW) shares, reiterating a Buy rating and a $24.00 price target. Currently trading at $15.25, the stock has shown strong momentum with a 35% gain over the past six months. The affirmation came after a recent series of store checks conducted across EZCORP and FirstCash (NASDAQ:FCFS) locations in the United States. According to InvestingPro data, analysts maintain a bullish consensus on EZPW, with multiple upward earnings revisions for the upcoming period. This latest round marks the tenth since Canaccord initiated coverage on EZCORP in January 2023, aiming to gauge business trends during the tax refund season.

According to the findings, 75% of the locations reported normal business activity for the spring, while 15% were busier than usual. The checks provided an encouraging sign that the pawn business remains robust. Canaccord highlighted the ongoing macroeconomic challenges, including inflation and economic uncertainty, which appear to be driving a higher demand for pawn loans among EZCORP's value-conscious customer base. This is reflected in the company's strong financial performance, with a healthy gross profit margin of 58.8% and an attractive P/E ratio of 10.8x.

EZCORP has been noted by Canaccord as the most inquired-about stock in their coverage, with a significant lead over the second most inquired. The firm's analysis suggests that EZCORP has demonstrated resilience during the current market downturn, benefiting from its counter-cyclical nature. Pawn loans, which are more profitable, tend to perform better during tough macroeconomic times, a trend observed by the firm.

In light of the recent store checks and the company's performance, Canaccord has made a modest increase to their estimates for EZCORP. The firm maintains its conviction that EZCORP is well-positioned to operate effectively in various economic conditions, reinforcing their Buy rating and $24 price target for the company's stock. With the next earnings report due on April 30, investors can access comprehensive analysis and additional insights through InvestingPro, which features detailed financial health scores and over 10 key investment tips for EZPW.

In other recent news, EZCORP, Inc. has successfully completed a private offering of $300 million in senior notes due 2032, with the net proceeds amounting to approximately $292.5 million. The company plans to use around $103.4 million of these proceeds to repay its 2.375% Convertible Senior Notes maturing in 2025, while the remaining funds are earmarked for general corporate purposes. Additionally, EZCORP announced the termination of its planned acquisition of 53 pawn shops in Mexico from Presta Dinero, S.A. de C.V., but remains committed to expanding its presence in the region through new store openings and strategic acquisitions.

Roth/MKM recently initiated coverage of EZCORP with a Buy rating and set a price target of $16, highlighting the company's innovative business model and strong financial performance. Canaccord Genuity also raised its price target for EZCORP to $22, maintaining a Buy rating after the company reported a 7% increase in Q4 sales and a 13% rise in pawn loans outstanding. The firm's analyst noted that the company's loyalty program, EZ+, showed significant growth, and expressed confidence in the pending acquisition of Auto Dinero. Both analyst firms pointed to the upcoming maturity of the May 2025 convertible notes as a potential catalyst for the stock, with expectations that addressing this debt could positively impact the company's valuation.

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