Shares of Credit Acceptance (CACC) surged 6.99% in pre-market trading on Friday, following the company's better-than-expected fourth-quarter 2024 earnings results. The subprime auto lender reported earnings per share of $12.26, significantly higher than the consensus estimate of $6.82, driven by increased finance charges, growth in net loan receivables, and a decline in provisions for credit losses.
According to the earnings call transcript, Credit Acceptance's loan portfolio reached a record high of $8.9 billion, an adjusted increase of 15% from the previous year. The company also reported a market share of 6.1% year-to-date through November in the core segment of used vehicles financed by subprime consumers, up from 4.8% in the same period of 2023.
Despite slower growth in the fourth quarter due to scorecard changes that resulted in lower advance rates, analysts at TD Cowen and Stephens raised their price targets on CACC, citing the company's strong performance and positive outlook. Stephens raised its target to $500 from $452, while TD Cowen raised its target to $450 from $420, although it maintained a "Sell" rating on the stock.
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