Ahead Of The Bell: Cash America International

NEW YORK (AP) — Pawnshop operator and payday lender Cash America International Inc. was upgraded Tuesday by an analyst because of an improving regulatory outlook and potential growth opportunities.

Jefferies & Co. analyst Richard Shane increased his rating on the stock to "Buy" from "Hold." He also increased his price target to $30 from $22.

Shares of Cash America International increased 12 cents to $20.72 in premarket trading. Its shares closed Friday at $20.60.

In a research note, Shane said Cash America International's recent convertible equity offering of $115 million allowed it to pay off higher cost debt and now gives it spare capital for growth opportunities.

Cash America International's expansion of pawn stores into Mexico and its expected move into other foreign countries through its online payday lending platform should provide an additional boost to profitability beyond its stable U.S. earnings base, Shane wrote in the note.

Worries about tightened regulation that could severely limit earnings from payday lending are also easing, Shane said. A Texas law failed to make it to a vote and South Carolina recently passed an industry friendly bill, he said. A proposed federal bill would likely reduce profitability of payday loans, but still allow for enough earnings potential to continue those operations, Shane added.