* Sees Q4 profit above Street
* Consumer electronics sales strong
* Strenghtening credit portfolio
* Shares rise as much as 12 pct
(Recasts; adds analyst comment, share movement)
By Dhanya Skariachan
BANGALORE, Feb 19 (Reuters) - Retailer Conn's Inc (CONN.O) raised its fourth-quarter profit forecast as it saw strong demand for consumer electronic goods in its key Texas market and a recovery in its credit portfolio, which was hurt by Hurricanes Gustav and Ike, sending its shares up as much as 12 percent.
The Beaumont, Texas-based retailer of home appliances and consumer electronics has benefitted from giving customers flexible options to buy products on credit and operating stores in areas that have not been hit hard by the U.S. economic slump.
"They're predominantly located in Texas, which has been cited as one of the top two state economies in the country," Hudson Square Research analyst Scott Tilghman said by phone.
More than 88 percent of Conn's stores are located in Texas, mainly in the cities of Dallas, Houston, Austin and San Antonio.
The quarter was also boosted by replacement sales of electronics and appliances after hurricanes hit the region in September, Tilghman said.
Conn's, which competes with home goods retailers such as Williams-Sonoma Inc (WSM.N) and Tuesday Morning Corp (TUES.O), and consumer electronics retailers such as Best Buy Co (BBY.N), saw a 12.5 percent same-store sales gain in the fourth quarter.
Conn's was also helped by a fall in loan delinquencies in the quarter.
The retailer was aggressive in making sure payments were being made by customers and in negotiating payment terms, as well as being cautious in deciding who they provide credit to, Hudson Square's Tilghman said.
"Part of it is getting past the post-hurricane environment... part of it is very tight management on their front," Tilghman said of Conn's strengthening credit portfolio.
The company, which also sells lawn and garden products, furniture and mattresses, had announced earlier in February that revenue in the fourth quarter rose 22 percent to $245.4 million, mainly on higher sales at its consumer electronics segment.
Conn's, which sells home appliances and consumer electronics through nearly 76 stores in Texas, Louisiana and Oklahoma, sees earnings of 66 cents to 68 cents a share, before special items, up from its prior outlook of 53 cents to 58 cents a share.
Analysts were expecting the company to earn 58 cents a share, before special items, in the fourth quarter, according to Reuters Estimates.
The retailer also expects to record a non-cash decrease in fair value of its interests in securitized assets, citing the continued volatility in financial markets. The fourth-quarter forecast excludes the impact of this expense.
Conn's shares rose to a high of 15.74, before paring some gains to trade up 19 cents at $14.24 Thursday morning on Nasdaq. (Additional reporting by Mihir Dalal; Editing by Anthony Kurian, Anil D'Silva)