Seaport Global sets $124 target on Enova stock with Buy rating

On Wednesday, Seaport Global Securities initiated coverage of Enova International (NYSE:ENVA) with a positive outlook, assigning a Buy rating and setting a price target of $124.00 per share. Currently trading at $99.22, the stock has shown impressive momentum with a 58.73% return over the past year. The financial firm’s analysts highlighted Enova’s robust data collection since 2004 as a key competitive edge, especially in loan underwriting and credit performance. According to InvestingPro data, analyst targets range from $109 to $138, suggesting potential upside from current levels.

The analysts noted that Enova’s market share is currently small within the sub- and non-prime consumer loan markets, as well as in the small business lending platform. This positioning is expected to facilitate controlled, long-term growth. They also pointed out that Enova operates exclusively online, which allows for a scalable business model where variable costs account for over half of total expenses. The company’s efficiency is reflected in its impressive 82.18% gross profit margin and strong revenue growth of 21.58% over the last twelve months.

Enova’s consumer lending business is considered to be potentially more resilient during economic downturns, which has been a recent concern among investors. This resilience is attributed to high margins and a manageable credit loss volatility for sub-prime borrowers, based on historical data, along with a variable cost structure. The analysts anticipate that any short-term credit loss volatility would be followed by a swift return to profitability after the initial loss emergence period, which typically lasts 3-6 months.

The small business portfolio shares similar traits with the consumer lending business, although it hasn’t been tested through a complete economic cycle. However, with the recent easing of tariffs, a key concern for small businesses, the analysts believe the risk of significant adverse credit issues is reduced.

Seaport Global Securities expects Enova to generate returns on equity between 25%-30%, with earnings per share (EPS) growth in the upper teens percentage range. They also note that Enova has an active share repurchase program, which InvestingPro identifies as a key strength. The company currently trades at a P/E ratio of 10.82x and maintains a "GREAT" financial health score of 3.29 out of 4. While acknowledging that the 9x multiple assigned to Enova’s shares might appear low for a company with these characteristics, the analysts suggest that a clearer macroeconomic outlook could further enhance the company’s valuation. For deeper insights into Enova’s valuation and 8 additional ProTips, explore the comprehensive Pro Research Report available on InvestingPro.

In other recent news, Enova International reported impressive financial results for the first quarter of 2025. The company exceeded earnings expectations with an EPS of $2.98, surpassing the anticipated $2.76, and achieved revenue of $746 million, which was above the forecasted $734.15 million. This performance marked a 22% increase in revenue year-over-year, highlighting Enova’s effective business strategies. Additionally, Enova’s loan originations grew by 26% year-over-year, reflecting strong demand in both its small business and consumer segments. The firm’s net charge-off ratio improved to 8.6%, indicating better credit performance.

In parallel developments, Citizens JMP maintained its Market Outperform rating for Enova, with a price target of $135. The firm highlighted Enova’s diversified portfolio and projected a ~22.5% EPS compound annual growth rate through 2025 and 2026. The analyst from Citizens JMP noted the company’s strategic market position and its robust performance in gaining market share from traditional lenders. Enova’s management is expected to continue leveraging current market conditions to buy back shares, a move seen as enhancing shareholder value. These developments underscore confidence in Enova’s ongoing growth and stability in the consumer finance sector.

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