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On Wednesday, JMP Securities adjusted its stance on Opportunity (SO:FTCE11B) Financial LLC (NYSE: OPFI), downgrading the stock from Market Outperform to Market Perform. The firm cited the stock’s substantial appreciation over the past year as the primary reason for the change in rating. According to InvestingPro data, OPFI shares have delivered a remarkable 343.14% return over the last year, with a 225.38% gain since Q4 2024 and approximately 96% year-to-date. The stock is currently trading above its InvestingPro Fair Value, suggesting the recent rally may have pushed valuations into expensive territory.
The analyst at JMP Securities noted that despite the significant rise in OPFI’s stock price, there hasn’t been any new fundamental development driving the appreciation. The increase in share value has been partly attributed to heightened attention from retail investor forums. While the firm has recognized Opportunity Financial’s effective management of credit and expenses, along with a positive outlook for loan originations in 2025, they now consider the stock to be fairly valued at its current level. InvestingPro data shows the company maintains strong fundamentals with a "GREAT" overall financial health score and impressive revenue growth of 23.85% over the last twelve months.
Additionally, the analyst expressed concerns over the dilution of shares due to warrants from the special-purpose acquisition company (SPAC) era. It’s expected that these warrants could increase the diluted share count by 4%-5%, considering the current share price. JMP Securities has referenced the current price-to-earnings (P/E) multiple of approximately 15 times their 2025 adjusted earnings per share (EPS) estimates and 13 times their 2026 adjusted EPS estimates to support their position on the stock’s valuation. InvestingPro subscribers have access to 12 additional key insights about OPFI, including detailed valuation metrics and comprehensive financial analysis in the Pro Research Report.
The firm previously held a price target of $10.50 for OPFI, which was based on around 9 times their former 2026 adjusted EPS estimates. However, with the recent performance and adjusted valuation metrics, JMP Securities has decided to remove the stock from their list of outperforming market picks. The downgrade reflects a reassessment of Opportunity Financial’s market position after a period of rapid stock price growth. The stock currently trades at a P/E ratio of 39.87, significantly higher than JMP’s forward estimates.
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