Portfolio Recovery, Inc. (PRAA) - Bull of the Day

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We are upgrading our recommendation on Portfolio Recovery, Inc. ( PRAA ) to Outperform from Neutral based on its strong cash collections and strategic acquisitions. The company's second quarter earnings surpassed the Zacks Consensus Estimate and the year-ago earnings on account of strong top-line growth attributable to continuous improvement in cash collections.

Call center, legal and purchased bankruptcy collections drove the topline growth. Even the performance of the fee-for-service business showed improvement after posting weak results in the past few quarters. The balance sheet also strengthened with higher cash and shareholder equity.

Long-term investments are benefiting the core portfolio, while strategic acquisitions are accelerating earnings growth. The credit facility will further enhance the company's liquidity, auguring well for Portfolio Recovery's long-term expansion plans. Our six-month target price of $120.00 per share equates to about 16.8x our earnings estimate for 2012. This target price implies an expected total return of 20% over that period.
 
PORTFOLIO RCVRY (PRAA): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

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