On Thursday, Jefferies made adjustments to its outlook on Conn's Inc. (NASDAQ:CONN), a specialty retailer. The firm's analyst has reduced the price target to $5.50 from the previous $6.50. Despite the cut, the analyst maintained a Buy rating on the stock.
The adjustment follows a review of Conn's acquisition of Badcock and an analysis of the company's master trust data. According to the analyst, Conn's 2023 securitization delinquencies and net charge-offs (DQ/NCOs) are now aligning more closely with the performance seen in 2021 and 2022. This observation indicates a stabilization in the company's credit performance.
The analyst also noted a divergence in the state of the non-prime consumer when comparing Conn's performance with that of competitors such as Progressive Leasing (PRG) and Upstart (NASDAQ:UPST) Holdings (UPBD), versus America's Car-Mart (NASDAQ:CRMT). This suggests varying conditions across the sector impacting different companies in distinct ways.
Furthermore, the report anticipates a modest improvement in shorter-duration product categories. This is a positive sign for Conn's as it could indicate potential growth in certain areas of its retail business.
In summary, the reduction in Conn's price target to $5.50 is attributed to persistent credit challenges and top-line headwinds. Despite these issues, the firm maintains a positive outlook on the retailer with a Buy rating, indicating an expectation of future performance improvement.
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