Wedbush Adjusts Targets On Credit Card Lenders, Pawn, Installment Names

Wedbush has raised the price targets of specialty finance firms to reflect an increase in valuation multiples accompanying the rally in financials since November 9, impact of higher rates and changes in currency.

Commenting on the sector, analyst Henry Coffey Jr. believes a Republican Congress/presidency will result in less changes to financial services regulation than many expect. In fact, the brokerage expects a Trump administration will not repeal Dodd-Frank, but do anticipate the lifting of the SIFI threshold from its current $50 billion.

Further, the potential lifting of SIFI limit should trigger increased M&A/consolidation activity and could “prove to be a boon” to bank-funded mortgage originators such as Flagstar Bancorp Inc (NYSE: FBC).

“While we are expecting a less punitive CFPB, we doubt this bureau will back away from many of its core values and we expect them to move forward with their already articulated plans to regulate high rate (+36 percent) installment and payday lending,” Coffey wrote in a note.

In addition, Coffey predicts a Trump administration to widen access for millennials to housing finance and explore measures to ease student debt burdens.

“An expansion of Fannie’s new mortgage/student debt refinance product is just one of several possible developments,” Coffey added.

Against this backdrop, Wedbush made the following price target changes: