Encore Capital Inc. (ECPG) PT Lowered to $64 at Truist Securities

Truist Securities analyst Mark Hughes lowered the price target on Encore Capital Inc. (NASDAQ: ECPG) to $64.00 (from $70.00) while maintaining a Buy rating.

The analyst commented: "ECPG’s aggregate yield gained 3 bps sequentially in the second quarter to 9.05% thereby supplementing the gain of 4 bps in the first quarter (which had reversed a trend of general decline since early 2020). The company is helped here by the estimated collections multiple on the 2024 paper of 2.3x, steady with the 2.3x multiple for 2023 albeit up from 2.1x for 2022. The company discloses its effective interest rate –synonymous with our yield calculation though presented on a monthly basis – which for the 2024 US vintage was 3.6% and for the 2023 paper was 3.3%, above the company’s overall rate of 3.0% for all geographies and all years. Thus, as the company buys more of the new paper (particularly in the US) it should drive up the aggregate yield and thereby boost revenue recognition."

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