What is the outlook for the company's credit‑risk exposure and credit‑loss provisions in the upcoming quarters?

Fundamental outlook – CoreCard’s Q2 2025 release highlighted a “stable” credit‑loss provision at $12 million, roughly flat versus Q1 and well below the $18 million peak recorded in Q4 2024 when macro‑tightening and higher‑risk fintech borrowers strained the portfolio. Management stressed that the recent migration to its AI‑driven underwriting platform has already reduced “high‑risk” exposure by about 8 % YoY, and the company now expects the net credit‑risk charge to compress further to the low‑single‑digit‑percent range in the next two quarters. The macro backdrop is also improving: the US consumer credit‑growth rate eased to 2.1 % in June, and the Fed’s policy‑rate corridor is stabilising, which should curb default‑rate upside for the fintech segment that makes up ~45 % of CoreCard’s loan‑originations.

Technical view – The stock has been trading in a tight 20‑day range of $42.80‑$44.30 since the Q2 earnings beat, finding support near the 200‑day moving average at $42.90. Momentum indicators (RSI ≈ 48, MACD ≈ 0) signal a neutral stance, but the price is poised to test the $44.30 resistance on any forward‑guidance lift. A breakout above $44.30 with volume could price‑in a faster‑than‑expected decline in credit‑loss provisions, while a dip below $42.80 would likely reflect concerns over lingering exposure to “late‑stage” fintech borrowers.

Trading implications – With credit‑risk exposure trending down and provisions expected to fall, the upside‑bias to the stock is modest but credible. A long‑position (or add‑to‑existing) at current levels with a $42.80 stop‑loss protects against a surprise deterioration in credit‑quality, while a partial profit‑target near $44.30 captures the next technical resistance. If the market digests a more aggressive provision reduction in the upcoming Q3 2025 guidance, a short‑term call‑option play on the $44.30 strike could be justified. Overall, the outlook for credit‑risk and loss provisions is improving, supporting a neutral‑to‑bullish stance for the next 2‑3 quarters.