Analysts Weigh In On Elevate Credit After 40% Plunge

Shares of Elevate Credit Inc (NYSE: ELVT), a provider of online credit solutions for non-prime consumers, plummeted 38 percent following its third-quarter earnings report. The company highlighted an “unexpectedly challenging” quarter, including “delays in rolling out new technology and credit models.”

The Analysts

William Blair’s Robert Napoli downgraded Elevate Credit from Outperform to Market Perform with no assigned price target.

Credit Suisse’s Moshe Orenbuch maintains an Outperform rating on Elevate Credit with a price target lowered from $10.50 to $8.

William Blair: Lack Of Consistency

Elevate Credit showed 5-percent year-over-year growth in adjusted EBITDA to $18.5 million, but this was notably short of expectations for $32 million, Napoli said in a note. Loans growth of 16 percent from a year ago marks a deceleration from 24 percent in the second quarter and short of expectations for 23 percent. Elevate Credit also faced higher expenses in the United Kingdom business due to a lack of clarity in regulatory changes.

Looking forward, management’s 2018 guidance at the midpoint of the range implies revenue growth of 18 percent, adjusted EBITDA growth of 34 percent and an adjusted EBITDA margin of 15 percent — short of the analyst’s estimates as well as the consensus estimate.

Napoli said the company has shown improvements in its business since its April 2017 initial public offering, but at a much slower pace than expected.

Credit Suisse: Valuation Still Attractive

Despite reporting a “broad miss” in the quarter, shares of Elevate Credit are still attractive, Orenbuch said. The company should benefit in 2019 from better credit and lower funding costs along with the FinWise partnership all of which should support earnings growth.

The firm’s $8 price target is based on eight times estimated 2019 EPS, which makes the stock look “inexpensively valued” versus its peers at current levels.

Price Action

Shares of Elevate Credit hit a 52-week low of $3.76 Tuesday and closed down 38.5 percent at $3.90.

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Earnings Scheduled For October 30, 2018