Shares of Conn's Inc. rocketed 18% in active morning trade Wednesday, fueled by an upgrade at Stifel Nicolaus, to extend a stunning two-week surge since the durable goods retailer reported fiscal second-quarter results after the Sept. 8 close. On Wednesday, Stifel analyst John Baugh raised his rating to buy from hold and set his stock price at $16, which is 36% above current levels. He said the company's announcement earlier this month, that it would increase the overall yield of its loan portfolio by 6 to 9 percentage points, could boost earnings per share by more than $2 a share by 2020. "While there may be some offsets of the yield benefit from the changes contemplated in the loan structure..., the potential benefits far exceed the negatives," Baugh wrote in a note to clients. The stock has now run up 80% since Sept. 8. Prior to the rally, the stock had plunged 77% in the past 12 months, compared with a 14% jump in the S&P over the same time, amid a string of disappointing quarterly results and concerns over the quality of the loans it provides its customers so they can make purchases.
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