Credit Acceptance Downgraded to Sell Amid Earnings Miss and Declining Market Share

Moshe Orenbuch, an analyst from TD Cowen, maintained the Sell rating on Credit Acceptance (CACC – Research Report). The associated price target is $430.00.

Moshe Orenbuch has given his Sell rating due to a combination of factors affecting Credit Acceptance’s financial performance. The company’s recent earnings report showed a significant miss in diluted GAAP EPS compared to both the analyst’s and consensus estimates, primarily due to a higher-than-expected provision for credit losses. This was driven by changes in forecasted collections and slower cash flow timing, which reduced the value of forecasted collections.
Additionally, Credit Acceptance has been experiencing a decline in forecasted collections for several quarters, with the 2022 vintage underperforming due to factors like elevated inflation and higher used vehicle prices. The company also faces challenges with slowing originations and a decline in market share, which have been impacted by changes in advance rates and increased competition. These factors have led to a decrease in the company’s adjusted EPS estimates and a lowered price target, contributing to the Sell rating.

Based on the recent corporate insider activity of 31 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of CACC in relation to earlier this year.