Nearly a year after an internal review pressured the resignation of LendingClub Corp LC’s last CEO, the company appears to be recovering nicely. In fact, Susquehanna Financial Group upgraded it to a Positive rating Monday with a $9 price target.
Analyst James Friedman predicted first-quarter results will not only be “close enough” but will provide momentum for 2017 and 2018 not yet calculated into present valuation or considered in short positions.
Growth Catalysts
SEC filings suggest LendingClub loans increased 34 percent between February and March, which inspired Friedman to raise his 2017 originations forecast to $9.947 billion, a 15 percent year-over-year increase, against the consensus of $9.37 billion. He also increased 2018 predictions to $13.356 billion against a $11.614 billion consensus.
Diminished competition bolsters the thesis.
“Traditional competitors such as Prosper have faded with financial troubles, and SoFi reviews at the aggregators such as Credit Karma seem to have fallen off,” Friedman wrote. “Goldman Sachs Group Inc GS’s ‘Marcus’ lending platform has an attractive policy of no origination fees, which poses increased competitive pricing pressure to LC. That said, LC continues to maintain a top position among the aggregators with very high customer satisfaction for transparency and ease of use.”
The End Game
Accordingly, Susquehanna raised its 2017 and 2018 annual revenue estimates to $593 million and $782 million, respectively, with adjusted EPS of $0.11 and $0.30.
“You could lose a buck, or make three,” Friedman wrote.
LendingClub was trading up 1.11 percent at $5.91 at the time of publication.
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