BTIG Sees Hopeful Signs for LendingClub (LC); Here’s Why


While the Street is enthused by the progress LendingClub (NYSE:LC) made in the first-quarter, will the results be truly revolutionary for the company’s stock? BTIG analyst Mark Palmer does believe the quarterly report offers hopeful signs, as he reiterates a Buy rating on the stock, with a price target of $7.00. (To watch Palmer’s track record, click here)

First-quarter revenues showed signs of rebounding, rising 22% from a year earlier to $152 million, while adjusted earnings came to $15.3 million for the period, above the top end of the company’s guidance.

Palmer commented, “We believe LC’s 1Q18 report offered several hopeful signs. The company’s adjusted EBITDA beat – it posted adjusted EBITDA of $15.3mm versus management’s guidance of $5mm to $10mm and the consensus estimate of $8.2mm – was attributed by management partly to improved marketing efficiency and partly to increased operating leverage. Those two elements will be critical if LC is to regain fully.”

“Indeed, even as LC management affirmed the FY18 guidance they had provided to investors during the company’s Investor Day in December, they offered 2Q18 adjusted EBITDA guidance of between $12mm to $22mm, a range wide enough and incorporating so many different outcomes as to have little value in directing investor sentiment. Toss in a 5% sequential decline in loan originations during 1Q18 to $2.31bn and the U.S. Federal Trade Commission (FTC) complaint filed against the company on April 25 and the company appears rife with uncertainty,” the analyst added.

As of this writing, LC shares are skyrocketing over 20% to $3.47 in reaction to the earnings beat.

If we turn to the Street in general, this peer-to-peer lending player certainly has the analysts divided. Based on 7 analysts polled by TipRanks in the last 3 months, 4 rate a Buy rating on LendingClub stock, while 3 maintain a Hold. The 12-month average price target stands at $5.18, marking a 50% upside from where the stock is currently trading.

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