On Wednesday, Jefferies, a global investment banking firm, announced an increased price target for PROG Holdings (NYSE: PRG), lifting it to $50.00 from the previous $42.00. The firm has reaffirmed its Buy rating on the stock. The adjustment follows PROG Holdings' recent financial performance, which surpassed market expectations.
The company reported an adjusted earnings per share (EPS) of $0.92, outperforming the consensus estimate of $0.74. This result was attributed to a combination of higher gross merchandise value (GMV) and revenues, better-than-expected margins, and reduced recurring operational expenditures. In light of these outcomes, Jefferies has expressed confidence in the company's financial trajectory.
PROG Holdings also provided a forecast for the third quarter that exceeded analysts' predictions, further bolstering investor optimism. Additionally, the company's full-year 2024 EPS guidance saw a 12% increase at the midpoint. This guidance reflects the company's positive outlook and potential for sustained growth.
The firm noted that write-offs remained within PROG Holdings' target range, indicating effective credit and risk management within the company. Such fiscal discipline is often seen as a positive indicator by investors and analysts alike.
With the earnings beat and raised guidance, Jefferies stands by its Buy rating, supporting the new price target of $50.00. This target is based on a 13 times multiple of the company's estimated earnings per share for the year 2025. The positive assessment by Jefferies reflects their anticipation of continued strong performance by PROG Holdings in the coming years.
In other recent news, PROG Holdings Inc. delivered a robust performance in the second quarter, surpassing market expectations with significant growth in gross merchandise volume (GMV) and increased revenues. The company's strategic initiatives, such as customer experience enhancements and expanded marketing efforts, have led to an increase in leases with both new and reactivated customers. PROG Holdings also capitalized on the broader market trend of tightened credit approval rates, which are anticipated to continue benefiting the company until 2024.
The updated financial outlook for the year reflects expectations for sustained GMV growth and an improved revenue forecast. PROG Holdings expects high single-digit GMV growth in Q3 and an enhanced revenue forecast for the full year. The revised revenue outlook for 2024 is between $2.4 to $2.45 billion, with adjusted EBITDA forecasted to be in the range of $265 million to $275 million.
InvestingPro Insights
Amidst the upbeat assessment from Jefferies, InvestingPro data reveals a nuanced picture of PROG Holdings' financial health. The company's market capitalization stands at a robust $1.8 billion, and it is trading at a price-to-earnings (P/E) ratio of 16.65, which adjusts to a more attractive 5.9 when looking at the last twelve months as of Q1 2024. This suggests that the company is valued favorably by investors based on its historical earnings.
Despite a slight decline in revenue growth of 5.8% over the last twelve months as of Q1 2024, PROG Holdings boasts a strong gross profit margin of 34.34%. This indicates efficient cost management and a healthy profit generation from its revenues. Additionally, the company's operating income margin stands at 15.83%, reflecting its operational effectiveness.
From an investment standpoint, two InvestingPro Tips stand out: Management's aggressive share buybacks signal confidence in the company's future, and analysts have revised their earnings upwards for the upcoming period, further supporting the positive outlook. For investors seeking more in-depth insights, there are additional InvestingPro Tips available for PROG Holdings at https://www.investing.com/pro/PRG. Take advantage of these tips and use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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