Has Lending Club Reached A Turning Point?

Following a beat-and-raise quarter from LendingClub Corp LC, analysts surmised the company may have reached an inflection point.

Credit Suisse analysts Stephen Ju and Christopher Ford noted this is the first quarter in about a year in which the company reported year-over-year growth in loan originations. The analysts expect ongoing acceleration throughout the next four quarters, as the company continues to recover.

Reviewing the results, Credit Suisse noted that the company reported second quarter net revenues of $139.6 million, ahead of its estimate of $136.4 million, and adjusted EBITDA of $4.5 million, ahead of its estimate of $2.9 million but trailing the consensus estimate of $5.3 million.

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The company raised its 2017 net revenue and adjusted EBITDA guidance, while also issuing third-quarter guidance.

Consequently, Credit Suisse raised its 2017 revenue estimate for Lending Club from $590.4 million to $601.9 million and adjusted EBITDA guidance from $39.1 million to $59.3 million.

Originations Growth Resumes

Meanwhile, Canaccord Genuity analyst Michael Graham said originations growth has resumed. Additionally, the firm noted that the company has begun to roll out borrower initiatives and has completed its first self-sponsored securitizations, which it sees as a new growth vehicle for the company.

Canaccord Genuity expects originations to grow sequentially in the third quarter or fourth quarter, aiding revenue growth acceleration in the second half of 2017 and notable sequential margin expansion.

"We believe new borrower initiatives and product enhancements coupled with strong institutional demand should help support the stock leading into the company's analyst day later this year," the firm said.

Although the firm expressed happiness over the renewed momentum, it said it needs to see evidence of more consistent execution in order for it to become more constructive on the stock.

The firm maintains its 2017 earnings per share estimate at 3 cents but nudged up its 2018 earnings per share estimate from 19 cents to 20 cents.

As such, Credit Suisse holds its Neutral rating on the shares of Lending Club, with a $8 price target. Meanwhile, Canaccord Genuity maintains its Holding rating and $7 price target for the shares of the company.

At last check, shares of Lending Club were rallying 14.65 percent to $6.26.

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