Yesterday, LendingClub Corp (NYSE:LC) executives CEO Scott Sanborn, CFO Tom Casey, and COO Sameer Gulati held an analyst meeting in New York City to discuss progress in gaining additional investors to the fintech firm’s marketplace platform, next steps for its funding mix, and what it really means for LC’s investment fund’s first month revealing a negative return since it began in 2011.
Subsequently, BTIG analyst Mark Palmer highlights key takeaways from the meeting and reiterates a Buy rating on LC with a $9 price target, which represents a 44% increase from where the stock is currently trading.
First, Palmer notes, “Management said they felt good about the progress they have made in attracting investors back to LC’s platform in the months following a scandal involving misallocated loans that resulted in the resignation of CEO Renaud Laplanche on May 9.” Laplanche had been the founder and initial CEO of LendingClub.
Second, the analyst comments, “The group of investors taking the longest to return to LC’s platform were banks, although management cited ‘great progress’ in that regard.”
Third, regarding the LC Advisors Broad Based Consumer Credit Fund’s return of negative 0.49% back in August, fodder for a media report released on Monday, “Management said the difference in methodologies had been “a timing thing” rather than a difference in the performance of the underlying loans,” Palmer explains.
Fourth, Palmer’s bullish perspective on the firm is bolstered by management’s positive moves forward following what LC refers to as a ‘black swan’ spiral that led to the eventual departure of Laplanche.
“Management said the incentives LC had put in place after Laplanche’s resignation to accelerate the pace of investors’ return to the platform had ended in July and August, adding that the response to them had been so strong that it was possible that some business had been pulled forward,” Palmer concludes.
As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, analyst Mark Palmer is ranked #3,909 out of 4,181 analysts. Palmer has a 46% success rate and faces a loss of 3.7% in his annual returns. When recommending LC, Palmer loses 25.3% in average profits on the stock.
TipRanks analytics indicate LC as a Hold. Based on 8 analysts polled in the last 3 months, 1 rate a Buy on LC, while 7 maintain a Hold. The 12-month price target stands at $6.40, marking a nearly 3% upside from where the shares last closed.