Burford Capital Ltd. (NYSE:BUR) is one of the 10 Oversold Small Cap Stocks to Buy Now.
On March 30, Wedbush downgraded shares of Burford Capital Ltd. (NYSE:BUR) to Neutral from Outperform. The company also lowered the price target from $6 to $4.75. This occurred after the company issued a press release about its position regarding the decision of the United States Court of Appeals regarding YPF.
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In the statement, the company indicated that any fair value marking would trigger net worth requirements, which would prevent further debt issuance. Although there is no problem now, the limitation may cause changes in the company’s growth plans to generate more cash. It introduces another dimension of risk in terms of financial considerations, along with the legal risks that have been discussed above.
On March 30, Deutsche Bank’s Mark DeVries lowered his price target on Burford Capital Limited (NYSE:BUR) from $17 to $15, while reiterating a Buy rating on the stock. Despite the downward price target revision, the stock still has an upside potential of over 207%, which should spark investor interest in this oversold small-cap name.
DeVries reflected on the reversal issued by the United States Court of Appeals for the Second Circuit against an earlier ruling issued by the District Court, which held the Argentine Republic responsible for a contractual breach.
According to DeVries, market behavior since the first appeal hearing already suggested that this outcome was very likely. However, taking into account the facts of the case, the analyst still considers the final judicial reversal to be very unexpected and disappointing. Despite these immediate legal hurdles, DeVries says the company remains significantly oversold at current trading levels.
Burford Capital Ltd. (NYSE:BUR) is a global provider of legal financial goods and services. Its services include providing capital against high-value litigation and arbitration cases, legal risk management, managing legal financial assets on behalf of third-party investors, and providing other services to the legal industry.
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