Sterne Agee Maintains Buy, $42 Target on Rent-a-Center

Sterne Agee remains Buy-rated with a $42 target price on Rent-a-Center

as the company's RAC Acceptance with Best Buy may expand significantly. Sterne Agee says, "We believe there are additional signs suggesting the ongoing RAC Acceptance test with Best Buy (BBY- $25.08 -Not Rated) may expand meaningfully in the near term. Our checks show the possibility of 190 RAC Acceptance locations within Best Buy stores in the states of California and Florida. If such a transaction were to occur, we see incremental revenue/EPS potential of $115M and $0.25 for RCII once these stores mature (~4 years). In addition, if the agreement between RCII and BBY expands to more states, the revenue/EPS potential could be higher." RCII closed at $34.90 a share on Wednesday.