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On Monday, Keefe, Bruyette & Woods analyst Tim Switzer adjusted the price target for Atlanticus Holdings Corp. (NASDAQ: ATLC), increasing it to $60 from the previous $52, while maintaining a Market Perform rating on the company’s shares.
Switzer’s commentary highlighted the first quarter’s performance, which surpassed expectations primarily due to a change in the fair value (FV) line. Despite this accounting-driven beat, Switzer noted that Atlanticus exhibited strong underlying trends, particularly in the area of accelerating receivables growth. The company’s robust performance is reflected in its impressive 17.71% revenue growth and healthy 70.88% gross profit margin. Positive credit trends were also observed, suggesting a moderation in the risks associated with heightened inflation.
Atlanticus management expressed confidence in the face of current economic uncertainties. They reported no noticeable effects on consumer behavior, spending, or credit performance due to recent economic shifts. InvestingPro analysis reveals that management has been actively buying back shares, demonstrating their confidence in the company’s prospects. Furthermore, management is optimistic about the resilience of the company’s credit card portfolio, even in the event of a potential economic downturn, which they currently do not anticipate. For deeper insights into ATLC’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
The growth in receivables has been a key factor supporting the company’s financial estimates, despite rising expenses and a cautious stance on net charge-offs (NCOs). This growth has contributed to the company’s remarkable 89.8% return over the past year. Switzer’s revised price target and estimates reflect these dynamics, along with a reiterated Market Perform rating for Atlanticus stock.
In other recent news, Atlanticus Holdings Corp. reported a strong fourth-quarter performance, with earnings per share (EPS) of $1.42, surpassing expectations. The company also exceeded revenue forecasts, with positive credit trends contributing to the results. Analysts at JMP Securities maintained their Market Outperform rating, adjusting the price target to $72, based on discussions with management and a review of the company’s financial health. Keefe, Bruyette & Woods also noted the company’s robust performance, maintaining a Market Perform rating with a price target of $45, following the company’s better-than-expected operating EPS and revenue trends.
Atlanticus Holdings has been actively managing its portfolio, with a focus on point-of-sale (POS) retail cards that have lower yields and loss rates. The company has not observed any signs of weakening within its credit book, despite macroeconomic uncertainties. Analysts from Keefe, Bruyette & Woods anticipate continued growth in receivables, supported by favorable economic conditions such as moderating inflation and low unemployment rates. JMP Securities highlighted Atlanticus’ increased marketing spending and the replacement of older loans with higher-quality receivables as key factors in its revised outlook.
The company’s management has expressed confidence in its growth trajectory, citing favorable credit and spending patterns among borrowers. Atlanticus Holdings is expected to ramp up business investments following a period of cautious cost management. The firm’s strategic positioning, alongside partnerships like the one with Synchrony, is projected to support future growth and performance.
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