On Thursday, Oportun Financial Corp (NASDAQ:OPRT) experienced a shift in its stock rating as Jefferies downgraded the company from Buy to Hold. The firm also revised the price target significantly downward, from $9.00 to $3.50. The decision to downgrade the stock rating is based on a number of factors impacting the company's financial health.
The downgrade was prompted by a series of earnings revisions in recent quarters that were attributed to credit issues and fair value marks. Additionally, the company has been facing elevated credit losses, which have raised concerns about its financial stability.
Jefferies highlighted that Oportun Financial's high balance sheet leverage and the associated covenants are likely to constrain the company's operational flexibility. This financial leverage and its implications are key considerations in the revised rating and price target.
The firm's analysts have adjusted their estimates lower for the company, reflecting the concerns about its leverage and credit performance. In light of these challenges, the downgrade to Hold indicates a recommendation to maintain current stock positions without increasing exposure until there are signs of improvement.
The new price target of $3.50 represents a substantial decrease from the previous target of $9.00, signaling revised expectations for the stock's performance. Jefferies has indicated that it is awaiting leverage reduction and improving credit conditions before reconsidering the stock's rating.
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