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on thursday, Oportun Financial Corporation (NASDAQ:) had its stock rating changed as Jefferies downgraded the company from “buy” to “hold.” The company also significantly revised its price target downward from $9.00 to $3.50. The decision to downgrade a stock's rating is based on a number of factors that affect the company's financial health.
The downgrade was prompted by a series of earnings revisions in recent quarters due to credit issues and fair value assessments. Additionally, the company is facing increasing credit losses, raising concerns about its financial stability.
Mr. Jeffries emphasized that the high leverage of Oportun Financial's balance sheet and related provisions are likely to limit the company's operational flexibility. This financial leverage and its impact is an important consideration in rating and price target revisions.
The company's analysts lowered their forecasts, reflecting concerns about leverage and credit performance. Given these challenges, a downgrade to Hold indicates a recommendation to maintain current equity positions without increasing exposure until there are signs of improvement.
The new price target of $3.50 is a significant reduction from the previous target of $9.00, suggesting a revision to expectations for the stock's performance. Jefferies said it is waiting for deleveraging and improved credit conditions before reconsidering the stock's rating.
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