Piper Jaffray Cuts Price target on Conn's (CONN) to $37 Following 2Q and Announced Portfolio Securitization
Piper Jaffray reiterates an Overweight rating on Conn's Inc. (NASDAQ: CONN), and cut the price target to $37.00 (from $45.00), following the company's Q2 earnings and portfolio securitization announcement. Analyst Peter Keith views the securitization as a positive, saying that the securitization, while dilutive to EPS for now, sets the framework for a positive end result.
Keith commented, "We are maintaining our OW rating and lowering our price target from $45 to $37 on CONN following Q2 earnings and the announcement of the portfolio securitization. There are a number of moving pieces to the CONN story right now but here are our high level thoughts: (1) The securitization, while dilutive to EPS for now, sets the framework for a positive end result; (2) Credit metrics were somewhat disappointing, but the Labor Day shift likely put upward pressure on the August delinquency; (3) The Retail segment metrics remain impressive; and (4) We have no opinion on and have not yet spoken to the new CEO, Norman Miller. We are lowering our FY17E EPS from $3.47 to $3.05 due to higher borrowing costs and a slightly higher loan loss provision. Our EPS multiple assumption moves from 13x to 12x (historic median multiple) as CONN continues to carry credit risk for now, bringing out PT to $37."
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Shares of Conn's Inc. closed at $28.49 yesterday.