On Jan 23, Zacks Investment Research downgraded
Performant Financial Corp.
) by a notch to a Zacks Rank #4 (Sell).
Why the Downgrade?
Earnings estimates for Performant have failed to gain any
traction owing to the regulatory challenges, intense competition
and lack of any growth catalyst. Particularly, the stock has
tumbled more than 16% since the beginning of this year.
Additionally, this technology-enabled recovery and related
analytics service provider underperformed the one-year Nasdaq
index, which posted growth of 31.1% against a negative return of
21.3% clocked by the company.
While the performance in 2013 was stable at Performant, growth
is expected to be tempered by the mandate signed in Dec 2013 that
requires reduction on feespaid to the guarantee agencies for
rehabilitating student loans under the Federal Family Education
Loan Program (FFELP) effective July 2014. FFELP was suspended in
2010. These regulatory barriers amid intense competition are
likely to have adverse effects on Performant's financials in
2014, also making investors jittery.
On Nov 7, Performant reported third-quarter 2013 operating
earnings per share of 34 cents. Results exceeded the year-ago
quarter's earnings of 17 cents and the Zacks Consensus Estimate
of 22 cents. Growth was driven by 44% increase in the top line
and lower interest expenses, partially offset by 24% hike in
The Zacks Consensus Estimate for 2013 remained intact at 80
cents per share in the last 60 days.However,the estimate for 2014
dipped a penny to 73 cents during the same period. The estimate
for 2014 implies a year-over-year decline of 9.2%.
Meanwhile, the Most Accurate estimate for Performant's 2014
earnings stands at 65 cents a share, resulting in an
of -11%. Furthermore, no upward revision in estimates was
witnessed for both the years.
Other Insurers Worth a Look
We prefer to avoid Performant for the time being. However,
investors interested in the financial services industry may
consider stocks like
). All these stocks sport a Zacks Rank #1 (Strong Buy).
CARDTRONICS INC (CATM): Free Stock Analysis
PERFORMANT FINL (PFMT): Free Stock Analysis
PFSWEB INC (PFSW): Free Stock Analysis Report
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