Portfolio Recovery Associates stock price target raised to $24 by JMP

Investing.com - JMP Securities raised its price target on Portfolio Recovery Associates (NASDAQ:PRAA) to $24.00 from $23.00 on Tuesday, while maintaining a Market Outperform rating on the debt collection company. According to InvestingPro data, the stock appears undervalued at its current price of $15.63, trading at an attractive P/E ratio of 8.7x.

The price target increase follows Portfolio Recovery Associates’ recent earnings report, which showed GAAP earnings per share of $1.08, significantly above analyst expectations of $0.41 to $0.44. However, approximately $0.75 of the reported EPS came from a one-time gain related to the sale of the company’s Brazilian servicing business.

Normalized earnings of $0.33 per share fell below JMP’s forecast, primarily due to a modest write-down of less than 1% to expected future collections from the 2023 vintage. The firm noted that CECL accounting standards create significant earnings sensitivity to even slight variances in expected recoveries.

JMP highlighted continued strength in European collections and deployments, which benefited partly from weakened competitors in the region. The firm also pointed to ongoing operational improvements in the U.S. market, led by offshoring initiatives and legal collections efforts.

The research firm observed current-period collections showed material upside in Europe and modest improvements in the U.S., with improving overall portfolio yields based on higher expected returns from the 2024 and 2025 vintages.

In other recent news, PRA Group Inc. reported its second-quarter 2025 earnings, exceeding analysts’ expectations with an earnings per share (EPS) of $1.08, compared to the forecasted $0.66. Despite this earnings beat, the company’s revenue fell slightly short of expectations, coming in at $287.69 million against the anticipated $291.99 million. This represents a 1.47% miss in revenue projections. These developments have captured the attention of investors as they assess the financial performance of the company. The earnings surprise, with a 63.64% increase over expectations, is a notable highlight for PRA Group Inc. Analysts and investors are keenly observing these figures to gauge the company’s future prospects. The recent earnings report underscores the company’s ability to outperform on earnings while facing challenges in meeting revenue forecasts. As these results unfold, they provide valuable insights for stakeholders monitoring PRA Group Inc.’s financial health.

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