Jefferies Says FirstCash Could Emerge As A Consumer Finance Powerhouse

Earlier this week, First Cash Financial Services Inc (NASDAQ: FCFS) and Cash America International Inc (NYSE: CSH) shareholders approved a merger of equals between the two consumer finance giants. The merged entity will trade under the ticker FCFS on the NYSE. According to Jefferies analyst John Hecht, the combined entity provides investors with major upside.

“The merger affords numerous financial and strategic benefits, including broader sources of cash flows which serve to both improve organic growth opportunities as well as the capital return profile,” Hecht explained.

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In addition, Jefferies sees at least 30 percent accretion from cost synergies related to the deal.

The two companies’ combined presence in the United States and Latin America provides shareholders with unique growth opportunities. Hecht believes the combined company can continue to grow organically by expanding its presence in Latin America. At the same time, improved cash flow and a solid balance sheet should provide opportunities to further consolidate the U.S. market and/or up capital return to shareholders.

FirstCash should continue to benefit from higher gold prices as well.

Following the official shareholder approval for the deal, Jefferies has resumed coverage of FirstCash with a Buy rating and has set a $60 price target for the stock.

Both stocks are already up more than 41 percent in 2016.

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