Advanta Guides Higher

But it says yields may fall.
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Advanta

(ADVNB)

guided above the consensus for next year but said yields would fall temporarily as the company pays to add a record number of new customers.

The Spring House, Pa., credit card outfit said 2007 earnings from continuing operations are expected to be in a range of $3.15 to $3.25 per diluted share for Class A and Class B shares combined. This reflects estimated 2007 pretax income from Advanta Business Cards of between $152 million and $157 million. The company also indicated that 2008 earnings per share are estimated to increase by over 40% from 2007.

Analysts surveyed by Thomson Financial were looking for earnings of $3.06 a Class B share.

"2006 full year income from Business Cards is expected to increase by about 50% from 2005, despite ramped-up marketing to acquire a record number of new customers," the company said. "2007 income is expected to increase another 16% even after taking into account the temporary effect of lower yields related to this record number of new customers added in 2006. Further, the profits from these new customers are expected to make our 2008 income surge more than 40% higher than 2007 based on our current projections."

The company expects owned and managed business card receivables to grow by between 20% and 25% in 2007, while 2007 transaction volume is projected to increase between 15% and 20%. The company also expects the managed net credit loss rate for 2007 to be in a range of 3.2% to 3.5% with the owned net credit loss rate in a range of 3% to 3.3%.