LendingTree Boosts Q2 Guidance; Analysts Raise Price Targets


LendingTree (TREE) has now updated its Q2:20 guidance, sending shares 4% higher in Thursday’s after-hours trading.

Specifically revenue is now anticipated in the range of $182 – $186 million vs prior range of $160 – $175 million (and consensus of $170.45M), with GAAP net loss from continuing operations guided at ($10) – ($8) million.

Variable marketing margin is now anticipated to be $79 – $83 million vs prior range of $65 – $75 million. And adjusted EBITDA is now set for $28 – $32 million vs prior range of $12 – $18 million.

“While some of our businesses remain challenged as a result of the economic environment, others are performing exceedingly well and enabling us to remain strategically focused on investing in both sides of our marketplace to drive market share gains.” said Doug Lebda, TREE CEO.

J.D. Moriarty, CFO, added, “Much of the strength was driven by our Home segment where low interest rates have driven robust consumer interest in refinancing and product innovation has enabled us to retain greater capacity with our lenders than we’ve historically seen.”

According to Moriarty, the Insurance segment performed largely as anticipated, recovering from traffic challenges early in the quarter and gaining momentum into the second half. Meanwhile the Consumer segment remains challenged as unsecured credit remains tight with limited visibility into the true health of consumer balance sheets and small businesses continuing to struggle.

“While Q2 results are better than management’s prior expectations, our revised Q2 Revenue estimate (which is at the mid-point of the new guide) implies -34% Y/Y decline (vs. -39% Y/Y prior) – still one of the steepest Y/Y declines in Q2 among all of the Advertising companies we cover” comments RBC Capital’s Mark Mahaney.

Nonetheless, he has a buy rating on the stock and ramped up his price target from $356 to $361 (14% upside potential) following the announcement. “We believe its business model (75% variable expenses – primarily marketing) will clearly allow it to maintain profitability throughout the year” Mahaney explains.

He believes that when economic conditions recover, TREE’s fundamentals will substantially recover due to by its position as a leading Online Consumer Finance Marketplace and its material diversification within consumer finance.

Similarly SunTrust Robinson analyst Youssef Squali ramped up his price target from $265 to $335 on the news, and reiterated a buy rating. Overall the US’s largest online lending marketplace boasts a Strong Buy Street consensus, with 5 recent buy ratings vs just 1 hold rating. (See TREE stock analysis on TipRanks).

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