Analyst Moshe Orenbuch of TD Cowen maintained a Sell rating on Credit Acceptance, with a price target of $430.00.
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Moshe Orenbuch has given his Sell rating due to a combination of factors affecting Credit Acceptance’s financial performance. The company reported third-quarter earnings per share that fell short of both the firm’s and the consensus estimates, primarily due to decreased revenue and increased operational expenses. Additionally, the adjusted earnings per share were also lower than expected, prompting a reduction in the earnings projections for the upcoming years.
Furthermore, the company has faced a decline in market share within the subprime segment, dropping from 6.5% to 5.1% over the past year. This decrease is attributed to a challenging macroeconomic environment for subprime borrowers and heightened competition. The company’s recent changes in its scorecard have led to reduced advances and smaller loans, contributing to a 13% drop in October originations. The ongoing underperformance of recent loan vintages, particularly those from 2022 to 2024, has also led to a continuous reduction in forecasted cash flows, further influencing the Sell rating.
CACC’s price has also changed slightly for the past six months – from $487.420 to $452.380, which is a -7.19% drop .