Stock market today: S&P 500 drops for fifth day as focus shifts to Powell’s speech
Wednesday, BTIG analysts revised the price target for Lending Club (NYSE:LC) stock, reducing it to $20 from the previous $28, while continuing to endorse a Buy rating. The adjustment follows the company’s first quarter guidance for 2025, which did not meet expectations for quarter-over-quarter growth. Despite this, analysts at BTIG believe that the long-term growth trajectory for Lending Club remains positive. Currently trading at $16.83, the stock shows a P/E ratio of 35.64x, reflecting investor optimism despite recent headwinds. According to InvestingPro analysis, the stock is currently fairly valued based on comprehensive Fair Value calculations.
Lending Club’s recent initiatives are expected to significantly boost its volumes. These initiatives include obtaining investment grade ratings for the senior notes of its structured certificates, which is anticipated to attract more investors, such as insurance companies, and narrow the funding spread. Additionally, the company plans to expand marketing channels, resume digital advertising and direct mail in March 2025, and introduce the new DebtIQ application by the third quarter of 2025. The company’s strong financial position is evident in its impressive current ratio of 6.66, indicating robust liquidity to support these growth initiatives. InvestingPro subscribers can access 13 additional key insights about Lending Club’s financial health and growth prospects.
Analysts point out that, while Lending Club’s origination levels are currently below past achievements, the potential for growth remains substantial. They predict that origination volumes could triple, returning to the quarterly levels of $3-4 billion seen in 2019. The firm also emphasizes Lending Club’s profitability compared to competitors like SoFi (NASDAQ:SOFI), suggesting that Lending Club’s strategy to prioritize profitability over volume should lead to higher valuation.
Despite a 23% decline in Lending Club’s share price, which now values the company at 1.2 times its third-quarter 2024 tangible book value, BTIG analysts are optimistic about the stock’s future. They argue that if the fourth quarter of 2025 were the end point, a valuation of $13 would be fair. However, they expect substantial growth in earnings per share (EPS) for 2025 and 2026, with a forecasted increase of 62% year-over-year for 2026 and an introduction of a 17% year-over-year increase for 2027 EPS. Recent performance data from InvestingPro shows impressive momentum, with a 51.21% return over the past six months and an 87% return over the last year, suggesting strong market confidence in the company’s trajectory. Dive deeper into Lending Club’s comprehensive Pro Research Report, available exclusively to InvestingPro subscribers, for detailed analysis of growth prospects and valuation metrics.
In conclusion, BTIG has adjusted its valuation multiples for Lending Club due to slower near-term growth, applying a 14x price-to-earnings (P/E) multiple and a 1.5x price-to-tangible book value (P/TBV) multiple based on their 2026 estimates. This represents a significant discount compared to the 30x+ P/E multiples assigned to other fintech companies with similar growth profiles.
In other recent news, LendingClub Corporation reported its fourth-quarter earnings, which fell short of analyst expectations. The digital marketplace bank posted adjusted earnings per share of $0.08, slightly missing the consensus estimate of $0.09. However, the company’s revenue of $217.2 million surpassed expectations of $206.43 million, marking a 17% year-over-year growth.
LendingClub’s loan originations also saw a 13% increase year-over-year, reaching $1.85 billion in the fourth quarter. This growth in originations and an increase in net interest income contributed to a 17% rise in total net revenue, which also stood at $217.2 million.
CEO Scott Sanborn noted the company’s successful execution in 2024, highlighting growth in originations, new product launches, and an increase in membership to over five million. Looking ahead, LendingClub expects loan originations between $1.8 billion to $1.9 billion and pre-provision net revenue of $60 million to $70 million for the first quarter of 2025.
However, LendingClub’s net income decreased to $9.7 million from $10.2 million a year ago, and the company’s provision for credit losses increased to $63.2 million from $41.9 million in the prior year quarter. These recent developments provide a snapshot of the company’s performance and future expectations.
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