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The Expert View: Tesco, Schroders and Next
by Chris Marshall on Jan 06, 2014 at 05:01
Arrow’s ‘superior returns’ are sustainable
Analysts remain confident in the prospects for Arrow Global (ARWA.L), the debt recovery company that takes on portfolios of debtors at discounted prices and tracks them down.
Numis’s James Hamilton said the company was ‘on target’ after a pre-close trading update confirming that trading was in line with expectations for 2013 with a ‘strong pipeline of portfolio acquisition opportunities ahead’.
Hamilton, who rates the recently-listed company as ‘add’ (half way between hold and buy), pointed to Arrow’s unique skill set in a ‘competitive, cyclical industry’.
‘Key to Arrow's superior return is its ability to enhance the number of paying customers from the portfolios it acquires. Arrow typically enhances the number of paying customers by 50% after the vendors and a number of DCAs have already worked hard to collect on these accounts.
‘We believe the data and analytical skills of Arrow are very hard to replicate and consequently make the group's superior returns sustainable.’
Canaccord Genuity’s Robin Savage maintained his ‘buy’ recommendation on the shares.
Arrow fell 0.6% on Friday, to close at 260p.
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