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BofA/Merrill Lynch Starts America's Car-Mart (CRMT) at Underperform

July 18, 2014 7:27 AM EDT
Get Alerts CRMT Hot Sheet
Price: $63.87 +1.54%

Rating Summary:
    2 Buy, 5 Hold, 1 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 13 | Down: 11 | New: 11
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BofA/Merrill Lynch initiates coverage on America's Car-Mart (NASDAQ: CRMT) with a Underperform rating and a price target of $36.00 saying shares will likely come under pressure in the near term.

Analyst Elizabeth Lane Suzuki said default rates are climbing and the company tighten its lending discipline. "While we believe this is a more prudent long-term strategy than rushing into unsustainable and potentially aggressive lending practices, it is likely to further pressure near-term sales and earnings growth," Suzuki said.

The firm also notes pricing remains high on tight supply of older vehicles. "While the fleet of late-model (0-5 year old) used vehicles has started to grow, the supply of 6-12 year old vehicles remains tight. This has driven up pricing of Car-Mart’s core product category, hurting affordability to its customer base. It has also made new vehicle leases more attractive, compounding the competition problem."

For an analyst ratings summary and ratings history on America's Car-Mart click here. For more ratings news on America's Car-Mart click here.

Shares of America's Car-Mart closed at $37.57 yesterday.



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