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On Thursday, Encore Capital Group Inc. (NASDAQ:ECPG), currently trading at $32.92, maintained its Market Outperform rating and $55.00 price target from JMP Securities, following a robust first-quarter performance. According to InvestingPro data, analyst targets range from $55 to $66, suggesting significant upside potential, though the stock has shown high price volatility recently. The company’s U.S. operations saw record-setting purchases and collections, with stable pricing and improved collections in the UK. Encore Capital’s management confirmed a strong purchasing environment in the U.S. market, with high revolving balances and card charge-off rates. The company’s purchasing guidance for the year was reaffirmed.
Encore Capital has started its share repurchase program, with modest buybacks executed in the first quarter. The company’s management emphasized that share repurchases remain a priority. The positive first-quarter outcomes, along with the reiteration of full-year guidance, suggest that Encore Capital is benefiting from favorable conditions in the U.S., including a robust supply of receivables, stable consumer trends, and significant funding. InvestingPro analysis shows the company maintains strong liquidity with a current ratio of 10.47, though it faced profitability challenges in the last twelve months.
The company’s UK business, which had previously faced challenges, is now showing signs of recovery, adding to the confidence in the firm’s financial projections. JMP Securities’ $55 price target for Encore Capital stock is based on approximately 7 times their updated 2026 GAAP EPS estimate.
Encore Capital’s positive adjustment to expected recoveries, coupled with strong purchasing and collection dynamics, indicates a period of growth and stability for the company. With the UK business’s past difficulties being addressed, the focus on share repurchases, and the firm’s solid position in the U.S. market, Encore Capital appears well-positioned for continued success.
In other recent news, Encore Capital Group reported a strong financial performance for the first quarter of 2025. The company’s earnings per share (EPS) reached $1.93, significantly surpassing the forecast of $1.45, marking a 103% year-over-year increase. Revenue from global collections rose by 18% to $655 million, while portfolio purchases increased by 24% to $368 million. The company also noted a 101% increase in net income, reaching $47 million. Looking ahead, Encore Capital anticipates global portfolio purchases to exceed $1.35 billion in 2025, with global collections expected to grow by 11% to $2.4 billion. In the US market, Encore Capital’s Midland Credit Management achieved record portfolio purchases of $316 million and collections of $454 million. The company continues to focus on strategic capital allocation in the US, expecting favorable purchasing conditions. Meanwhile, Cabot (NYSE:CBT) Credit Management in Europe reported a solid performance, with collections rising by 7% to $150 million.
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