All I see in the PR is "for valuation." That, and a target price of $21. I don't love management of this company, but I didn't think they were THAT bad. Pawn is a great business, even without a tailwind from gold. Car title loans give you most of the punch of PDL with hardly any of the headaches. Ultimately, Crediamigo should do fine, even with the spastic financing of the deal. I'm pretty sure Mr Cohen can't increase his extortion payments any more unless the fortunes of the company improve (The text of the last increase in management fee would support charges of knowing breach of fiduciary duty against directors supporting a further increase--that isn't insurable. And that is probably why the language was put into the text--to draw a line). With normal governance this would be a $40+ stock; as it is, $21 looks a few dollars low.
here's a piece of the recommendation. I've been trying to post for a few hours but for some reason it the post gets booted. So sorry if there suddenly end up being three of these.
Nomura cuts pawnshop chain Ezcorp (EZPW) to neutral from buy, citing valuation and lack of near-term catalysts. Shares down 4.4% at $18.49. EZPW had been up 15% since recent lows on Nov 14, Nomura notes, following disappointing F4Q earnings and outlook, and "investors are unlikely to drive shares meaningfully higher until management proves that its turnaround strategies (aimed at offsetting core weakness in its existing storefront scraping business) are working." Plus, while planned revamps to EZPW's aging store base can add to results over time, "investments will weigh on results in 2013."
Sounds to me like they're mostly reacting to the stall in gold. The business about investments in revamping store base weighing on results in 2013 looks weak. I've seen some modernized stores (I think the concept comes in decent part from Cash Converters)--it doesn't look like an expensive makeover, and a side effect of keeping redundant inventory out of sight is that you can operate with less of it. Or are they talking about buying new stores and closing old ones? That's not something that is changing from the past, so why call it out?
Looks to me like "The market has spoken; we must change our analysis to match it." And that, in turn, comes back to my usual rant: EZCorp will benefit if management becomes friendlier to the owners.