FBR Capital Remains Sidelined on Enova International (ENVA) Following New CFPB Payday Lending Rules

FBR Capital maintained a Market Perform rating and $8.50 price target on Enova International (NYSE: ENVA) following the new CFPB payday lending rules. Total revenues could fall 20% to 25%, based on a 30% to 40% reduction on the 60% to 65% of covered revenues. Regulation in the U.K., which was similarly focused on affordability, reduced U.K. revenues by almost 70%, and the foreign EBITDA margin today is just 12% before factoring in corporate overhead. However, Positive trends in origination volume trends from 1Q16 have continued into the second quarter.

Analyst Bob Ramsey commented, "We reiterate our Market Perform rating on Enova following the new CFPB payday lending rules (which closely tracked the bureau's outline). Based on ENVA's outlook, the rules could reduce consolidated revenues by 20% to 25%. While significant, the projection is less than some feared, and the 30% to 40% drop in revenues on covered loans is far better than the 70% decline experienced in the U.K. We reiterate our 2016 estimate of $1.05 but reduce our 2017 estimate to $1.25 (from $1.35) to reflect lower revenues in the back half of the year. Our $8.50 price target equals 6.8x our 2017 EPS estimate and reflects a 4.8x 2017 EV/EBITDA multiple."

For an analyst ratings summary and ratings history on Enova International click here. For more ratings news on Enova International click here.

Shares of Enova International closed at $8.00 yesterday.

You May Also Be Interested In

• Enova International (ENVA) PT Raised to $78 at JMP Securities
• Ultragenyx Pharma (RARE) PT Raised to $61 at TD Cowen
• AGNC Investment Corp (AGNC) PT Lowered to $9.50 at BofA Securities