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Jefferies cuts Conn’s stock target, keeps Buy rating By Investing.com

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On Thursday, Jefferies made adjustments to its outlook on Conn’s Inc. (NASDAQ:), a specialty retailer. The firm’s analyst has reduced the price target to $5.50 from the previous $6.50. Despite the cut, the analyst maintained a Buy rating on the stock.

The adjustment follows a review of Conn’s acquisition of Badcock and an analysis of the company’s master trust data. According to the analyst, Conn’s 2023 securitization delinquencies and net charge-offs (DQ/NCOs) are now aligning more closely with the performance seen in 2021 and 2022. This observation indicates a stabilization in the company’s credit performance.

The analyst also noted a divergence in the state of the non-prime consumer when comparing Conn’s performance with that of competitors such as Progressive Leasing (PRG) and Upstart (NASDAQ:) Holdings (UPBD), versus America’s Car-Mart (NASDAQ:). This suggests varying conditions across the sector impacting different companies in distinct ways.

Furthermore, the report anticipates a modest improvement in shorter-duration product categories. This is a positive sign for Conn’s as it could indicate potential growth in certain areas of its retail business.

In summary, the reduction in Conn’s price target to $5.50 is attributed to persistent credit challenges and top-line headwinds. Despite these issues, the firm maintains a positive outlook on the retailer with a Buy rating, indicating an expectation of future performance improvement.

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