Zacks Investment Research upgraded shares of DFC Global Corp. (DLLR) from UNDERPERFORM to NEUTRAL on June 25, 2013, with a target price of $15.00.
We are upgrading DFC Global to Neutral from Underperform given its efforts to grow its pawn lending business. The company intends to foray into new countries, by acquiring small pawn shop chains initially, and then introduce Internet based unsecured allowance. DFC Global had a mixed fiscal third quarter 2013. Earnings surpassed the Zacks Consensus Estimate, but lagged the year-ago earnings. The company introduced a limit of 3 loan rollovers per customer leading to a credit crunch for customers carrying multiple loans. This led the company to face higher loan defaults in its UK business in the quarter, affecting the bottom line adversely. Both revenues and expenses increased in the quarter with expense growth surpassing the growth in revenues, thereby leading to a decline in operating income. Although the company engaged in share buybacks, the negatives dwarfed the potential positive impact of lower share counts on earnings. Nevertheless, DFC Global expects operating earnings to be in the range of $1.70-$1.80 per share for fiscal 2013.
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