Tuesday, December 12, 2006

Calls of Note Part 1

- Bear Stearns is raising their managed basis 2007 EPS estimate for CompuCredit (NASDAQ:CCRT) from $4.00 per share to $4.20 per share to reflect updated assumptions regarding interest rates and credit trends. This brings firm's estimate in line with the consensus and the earnings guidance issued by management along with Q3 results.

They are also establishing a year end 2007 price target of $48 per share or 11.5x 2007 estimate. Firm's year end 2006 price target was $38 per share.

CompuCredit remains uniquely positioned to take advantage of opportunities in sub-prime non-mortgage consumer lending. While the company's credit card business and purchased credit card portfolios still account for the vast majority of revenues and earnings, the company's investments in other businesses (micro lending, auto lending, and collections) to serve underserved/sub-prime consumers should help to increase diversification over time.

Firm notes their estimates and price target haven't assumed any significant benefit from the company's substantial excess capital position or the purchase of additional underperforming credit card portfolios. Some repurchase of shares is also possible, though unlikely.

Bear is maintaining their Outperform rating and believes the 2007 price target could prove too conservative if the company is able to deploy some or all of its excess capital in 2007.

Notablecalls: CCRT's one of Tom Brown's picks. Also check out the positive coverage the stock got in Barron's. I fully expect Bear's comments to create some buy interest today and in the coming days.

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