Jefferies equity analyst John Hecht upgraded EZCORP Inc. from "hold" to "buy" over successful efforts by the company's management to lower its regulatory and credit risk profile.
Hecht wrote that the business has migrated to a more "straightforward" model, simplifying its operations to focus on pawning, which has produced strong and improving results in recent quarters.
In addition, the company strengthened its balance sheet by extending liability maturities and improving liquidity while reducing its overall cost of funds. In addition, the company is trading at a substantial discount to its peers as well as its historical enterprise value/EBITDA multiple.
'Given the absolute and relative valuation opportunity along with an improved business profile, we upgrade EZPW to a buy," Hecht wrote.
Hecht's firm raised its fiscal year 2017 and 2018 EPS estimates to 53 cents and 70 cents, respectively. Jefferies' price target is $10.50.