Morgan Stanley Remains Sidelined on LendingClub Corp (LC); Here’s Why

LendingClub Corp (NYSE:LC) has been struggling with stagnant weekly funded retail volumes on the tails of its second-quarter results, based on the company’s weekly SEC filing for August and early September.

Morgan Stanley analyst James Faucette notes the troubled fintech firm’s retail volumes are failing to keep pace with his third-quarter estimated weekly run rate of $22.8 million, and as such, reiterates an Equal Weight rating on shares of LC without listing a price target, but lists a $4 to $8 Base Case Value.

Before LC’s CEO resigned, the firm was averaging $21.9 million, but quarter-to-date weekly volumes have now fallen to an average of $19.9 million. From Faucette’s view, this might not even be the rock bottom point for LC’s retail funding.

Though the analyst anticipates improvement down the line, as 23% of investors have indicated they plan to come back to the platform after giving up the investment for the time being, still, “it isn’t clear this upward inflection has started to take place. Note that retail funding accounts for 15-20% of LC’s total loan funding, while institutional funding has shown the most growth and also the most volatility.”

Additionally, Faucette comments, “Separately, our industry conversations indicate continued improvement in institutional interest, but that will likely be slow to impact LC’s P&L.”

“We would likely become more constructive with some affirmation that institutional investors, like retail investors, plan to return to the platform once everything normalizes,” he concludes.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, five-star analyst James Faucette is ranked #355 out of 4,147 analysts. Faucette has a 79% success rate and earns 9.0% in his annual returns.

TipRanks analytics exhibit LC as a Hold. 10% of analysts polled in the last 3 months rate a Buy on LC, while 90% maintain a Hold. The 12-month average price target stands at $6.24, marking a 15% upside from where the shares last closed.

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