Janney upgrades Encore Capital to Buy amid more favorable environment

As previously reported, Janney Montgomery Scott analyst John Rowan upgraded Encore Capital to Buy from Neutral with an unchanged fair value estimate of $59, citing the view that the debt collection industry could see a more favorable environment going forward. Credit is normalizing, while credit card receivables are at an all-time high, notes the firm, which contends that "record consumer debt at record rates heading into a recessionary environment is a good recipe for supply of non-performing loans." The firm also sees a potential upswing in domestic supply as the recent banking crisis draws attention to banking liquidity and thinks that tighter consumer credit standards "could exacerbate the already increasing loss rates."