Truist Securities Lowers Price Target for Portfolio Recovery Associates to $28.00 - What Does This Mean for Investors?
Truist Securities recently revised its price target for Portfolio Recovery Associates (NASDAQ:PRAA) shares, a financial and business services company, setting it at $28.00, down from the previous $42.00. Despite the lower price target, the firm maintains a Buy rating on the stock.
In the second quarter, Portfolio Recovery Associates saw a slight increase in profitability, with finance income and fees after operating expenses rising to $16 million from $15 million in the first quarter. However, the company's financial performance was impacted by increased legal spending, which rose by $10 million from the first to the second quarter.
When looking at the company's interest obligations, which reached $55 million in the second quarter, it suggests that Portfolio Recovery Associates may not be operating profitably according to GAAP, excluding portfolio gains. Cash receipts after expenses were reported at $280 million for the second quarter, showing an increase from the previous quarters.
In Q2 2024, PRA Group reported steady growth, with a 13% year-over-year increase in cash collections and a net income of $22 million. The company invested $379 million in purchasing loan portfolios and anticipates collecting $1.6 billion of its ERC balance over the next 12 months. Despite challenges in certain customer segments, PRA Group remains optimistic about its future performance.
The recent adjustment of the price target by Truist Securities reflects a nuanced outlook on Portfolio Recovery Associates' valuation. With a high P/E ratio and strong financial health, the company's future profitability looks promising. Investors can visit InvestingPro for more insights into PRAA's performance and outlook.
In conclusion, despite the lower price target, Portfolio Recovery Associates shows signs of growth and profitability, making it a potentially lucrative investment opportunity for investors.