On Deck Capital Inc (NYSE:ONDK), a leading platform for small business lending, today announced that in the quarter ended June 30, 2015 it sold a record $143.0 million1 of loans through OnDeck Marketplace®, a platform that enables institutional investors to purchase small business loans originated by OnDeck.

The record Marketplace sales reflected robust institutional investor demand and OnDeck’s previously announced goal to expand itsMarketplace platform. The $143.0 million in loans sold in the second quarter is a 55% increase over the $92.1 million1 ofMarketplace sales in the first quarter of 2015. Contributing to the Marketplace growth in the second quarter was a $51.9 million1, single-transaction portfolio sale to a leading global investment firm that was executed at record gain-on-sale levels for the platform.As with prior Marketplace transactions, OnDeck retained the servicing rights on all the loans sold in the second quarter.

“We believe institutional investors are increasingly seeking exposure to short-term business loans, as evidenced by the opportunity we had in the second quarter to grow our Marketplace business on very attractive terms,” said Howard Katzenberg, chief financial officer, OnDeck.  “The portfolio sale supports our long-term diversified funding strategy, is a natural extension of Marketplace and demonstrates the appeal of OnDeck’s loans and our platform to institutional investors. It also provides a useful template for continuing to meet the significant institutional demand for Marketplace loans, as we anticipate executing similar portfolio sales quarterly going forward depending upon market conditions.”

In the second quarter, 19% of the loans sold through Marketplace were loans originated prior to the second quarter that were previously designated as loans held for investment. Accordingly, in addition to the gain to be booked on the loan sales, there will be a corresponding release of loan loss reserves in the second quarter for the above-described 19% of loans sold.

To the extent that large portfolio sales continue in addition to historical OnDeck Marketplace transactions, the percentage of originations financed through OnDeck Marketplace is expected to exceed the company’s previous guidance of 25% to 30% of term loan origination volume.

Updated Guidance for Second Quarter 2015
OnDeck provided the following updated guidance for the three months ended June 30, 2015.

Second Quarter 2015

  • Gross revenue between $62.5 million and $63.5 million, including gain on sale between $11.0 million and $12.0 million
  • Adjusted EBITDA2 between $8.0 million and $9.0 million
  • GAAP net income between $4.0 million and $5.0 million

OnDeck expects that several of its key financial and operating metrics for the second quarter, including unpaid principal balance, average loans and metrics derived therefrom, will also be impacted by the record Marketplace sales. (Original Source)

In response to the earnings release, shares of On Deck Capital are up 4.20% to $13.65 in after-hours trading. ONDK has a 1-year high of $28.98 and a 1-year low of $12.90. The stock’s 50-day moving average is $13.24 and its 200-day moving average is $17.46.

On the ratings front, On Deck Capital has been the subject of a number of recent research reports. In a report released yesterday, Stifel Nicolaus analyst Chris Brendler maintained a Buy rating on ONDK, with a price target of $22, which implies an upside of 67.3% from current levels. Separately, on May 21, BTIG’s Mark Palmer maintained a Buy rating on the stock and has a price target of $25.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Chris Brendler and Mark Palmer have a total average return of 15.0% and -3.0% respectively. Brendler has a success rate of 75.7% and is ranked #516 out of 3708 analysts, while Palmer has a success rate of 46.4% and is ranked #3391.

The street is mostly Bullish on ONDK stock. Out of 5 analysts who cover the stock, 3 suggest a Buy rating , 1 suggest a Sell and one recommends to Hold the stock. The 12-month average price target assigned to the stock is $26.00, which represents a potential upside of 97.7% from where the stock is currently trading.

On Deck Capital Incalong with its subsidiaries is engaged in providing financing products to small businesses located throughout the United States, including term loans and lines of credit.