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On Thursday, Keefe, Bruyette & Woods (KBW) adjusted their price target on Lending Tree (NASDAQ: TREE) shares, reducing it from $73.00 to $66.00, while still maintaining an Outperform rating on the stock. The adjustment follows Lending Tree’s fourth-quarter earnings, which revealed an EBITDA significantly above KBW and consensus estimates, and marked the first time since the second quarter of 2021 that all three of TREE’s reportable segments saw year-over-year growth. The company’s last twelve months EBITDA stands at $42.33M, with revenue growth of 4.44% and an impressive gross profit margin of 95.54%.
Lending Tree’s management has projected this positive trend to continue into 2025. The company’s EBITDA guidance for 2025 aligns closely with KBW’s and consensus figures, and the management has expressed confidence in the business’s momentum at the start of the year. They also anticipate further gains in wallet share with network partners.
Despite the positive outlook and performance, KBW’s analyst Ryan Tomasello made a slight revision to the expected adjusted EBITDA for 2025, lowering it to $123 million from the previous estimate of $125 million. However, the firm’s estimate for 2026 remains unchanged at $150 million. The decrease in the price target to $66 is attributed to the application of a more conservative multiple of 8.5x, down from the previous 9x.
Lending Tree’s recent performance, with EBITDA beating expectations and segments returning to growth, has been acknowledged by KBW as a sign of the company’s resilience and potential for sustained success. The firm’s Outperform rating suggests that despite the lowered price target, they view Lending Tree’s stock as likely to perform better than the overall market in the near future. InvestingPro subscribers can access 8 additional key insights about TREE, including detailed financial health scores and comprehensive valuation metrics in the Pro Research Report.
In other recent news, LendingTree has reported a strong performance for the fourth quarter of 2024, significantly exceeding earnings expectations. The company achieved an earnings per share (EPS) of $1.16, compared to a forecasted loss of $0.14, and reported revenue of $261.5 million, surpassing the anticipated $230.9 million. Truist Securities responded to these robust results by raising the price target for LendingTree shares to $72, while maintaining a Buy rating. This adjustment follows the company’s successful execution in its Home, Consumer, and Insurance segments, marking the first double-digit revenue growth since mid-2021.
LendingTree’s management has expressed optimism for continued momentum into 2025, forecasting improved operating margins and a reduction in net leverage. The company expects to sustain double-digit revenue growth across its segments in the first quarter of 2025, with a particular focus on expanding its direct sales force and enhancing operational efficiency. Analysts at Truist Securities have noted the compelling valuation levels of LendingTree’s stock, trading at 0.9 times and 7.5 times the fiscal year 2025 revenue and adjusted EBITDA estimates, respectively.
The company’s recent achievements highlight its strategic focus on areas such as Insurance, which has helped offset challenges in other segments. With a projected 16% growth in adjusted EBITDA for 2025, LendingTree is positioning itself to address financial obligations and reduce its debt. These developments have garnered positive attention from investors, who are closely monitoring the company’s trajectory as it navigates a challenging economic environment characterized by high-interest rates.
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