From Standard & Poor's Equity ResearchRoth Capital upgraded the pawn shop company Cash America International (CSH
) to buy from hold, after the company on Monday raised its second quarter estimates and acquired CashNetUSA.
Analyst Richard Eckert believes CashNetUSA can impart powerful new momentum to earnings per share (EPS) growth. Even though online payday loan volumes are small vs. brick-and-mortar locations, he believes the former are growing much faster than the latter. He believes increased guidance reflects the skyrocketing price of gold over the last four quarters. Given his conviction that gold prices will remain elevated, CashNetUSA will represent a permanent source of increases in both revenue and EPS, he says. He raises his $1.81 2006 EPS estimate to $1.90 and his $2.10 2007 estimate to $2.22. He set a $38 stock price target.