UPDATE: Bank of America Initiates Coverage on Credit Acceptance Corp. with Neutral Rating, $121 PT on Limited Near-Term Upside

In a report published Monday, Bank of America analyst Kenneth Bruce initiated coverage on

with a Neutral rating and $121.00 price target. In the report, Bank of America noted, “We are initiating coverage on Credit Acceptance Corp. (CACC) with a Neutral rating and establishing a $121 price objective. CACC is a well-established subprime auto lender with an attractive and proven business model. High-single to mid-teens EPS growth should drive modest valuation expansion and a 10% total return. However, upside on CACC is limited in the near term given concerns of an overheating auto lending market and increased competition, which could slow growth. We are constructive on CACC navigating a somewhat frothy sub-prime auto market, though we think decelerating earnings growth could cap the upside and warrants a Neutral rating.” Credit Acceptance Corp. closed on Friday at $113.14.