Advance America Cash Advance Centers downgraded to "market perform" - update

03/04/05 - JMP Securities

NEW YORK, March 4 (newratings.com) - Analyst John Hecht of JMP Securities downgrades Advance America Cash Advance Centers (AEA) from "market outperform" to "market perform," while reducing his estimates for the company.

In a research note published yesterday, the analyst mentions that the FDIC has issued new policies for bank-agency payday lending partnerships, which limit the annual borrowing frequency of a payday customer. The downgrade in rating is based on the uncertainties surrounding the new regulatory guidelines, JMP Securities says. According to the analyst, Advance America Cash Advance Centers' annual revenues are likely to be adversely affected by 12%-14% on account of the new policies. The EPS estimates for FY05 and FY06 have been reduced from $1.05 to $0.75 and from $1.30 to $1.10, respectively.