Jefferies Starts Aaron's (AAN) at Buy
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Jefferies initiates coverage on Aaron's (NYSE: AAN) with a Buy rating and a price target of $30.00, saying they consider AAN to be the better positioned of the two currently and recommend investors buy AAN shares.
Analyst Kyle Joseph commented, ".From a fundamental perspective, AAN's core store business has seen declining rates of SSS reductions, while its Progressive segment has sustained attractive growth with solid margins (and is becoming a larger portion of the consolidated company). Importantly we highlight diverging trends for AAN from RCII in recent periods and believe this continued in 3Q16, and thus view recent AAN weakness as an attractive entry point. In addition, the company has ample liquidity (>$3.30 per share of cash on its balance sheet) to fund further debt paydowns, capital returns, Progressive growth and potential acquisitions. We believe the consolidated AAN is well-positioned to return to EPS and EBITDA growth, driven by Progressive, which we see as a catalyst for multiple expansion."
Shares of Aaron's closed at $22.68 yesterday.
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