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On Friday, Needham analysts adjusted their stance on Lending Tree (NASDAQ:TREE), a leading online lending marketplace, by reducing the price target from $65.00 to $62.00. Despite this change, they maintained a Buy rating on the company’s shares. The revision came after Lending Tree’s first-quarter earnings failed to meet expectations, which was attributed to several challenges within its insurance vertical. According to InvestingPro data, the stock has shown remarkable resilience with a 39.66% year-to-date return, despite not being profitable over the last twelve months.
The company faced larger than usual seasonal headwinds and felt the effects of a partial quarter impact from a Federal Communications Commission ( FCC (BME:FCC)) regulation change. However, the implementation of this regulation has been postponed. Needham’s analysts highlighted that despite these setbacks, Lending Tree’s diversified marketplace model is showing strength, particularly in the home and consumer segments. This strength is reflected in the company’s impressive 33.86% revenue growth in the last twelve months, as reported by InvestingPro.
The analysts noted that insurance advertising budgets are still robust, which could be seen as a positive sign for Lending Tree’s future performance. They also pointed out that while there might be some near-term volatility due to broader economic concerns, the overall risk-reward profile for Lending Tree’s stock remains favorable.
The expected opening valuation of the company’s stock at an enterprise value to FY26 EBITDA multiple of 7.2x was cited as a basis for the continued Buy rating. In their commentary, Needham analysts expressed confidence in the company’s long-term prospects and reiterated their endorsement of the stock despite the slight decrease in the price target.
The adjusted price target reflects a cautious but optimistic outlook for Lending Tree, taking into account both the challenges it faces and the underlying strengths of its business model. The analysis by Needham suggests that, despite the headwinds, there is potential for growth and a positive investment opportunity in Lending Tree’s shares.
In other recent news, LendingTree reported its first-quarter 2025 earnings, showcasing a significant earnings per share (EPS) beat but a revenue miss. The company posted an EPS of $0.99, far exceeding the forecasted $0.18, while revenue came in at $239.7 million, falling short of the anticipated $247.74 million. Despite the strong EPS performance, the revenue shortfall has raised concerns among investors. LendingTree’s insurance segment saw a 71% year-over-year increase in revenue, although temporary regulatory challenges and one-time expenses impacted the company’s adjusted EBITDA. The company remains optimistic about future growth, projecting a 15% increase in adjusted EBITDA at the midpoint of its annual outlook. Analysts focused on potential tariff impacts and growth potential in small business loans during the earnings call. The company also addressed a litigation reserve related to a QuoteWizard settlement.
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