Northland lifts OneMain stock rating, sets $55 price target

On Tuesday, Northland analysts upgraded OneMain shares, trading on the New York Stock Exchange (NYSE:OMF), from Market Perform to Outperform, setting a price target of $55.00. The upgrade reflects a positive shift in the firm's assessment of the risk/reward balance for OneMain's stock, which appears undervalued according to InvestingPro analysis. The stock has declined over 15% in the past week, with technical indicators suggesting oversold conditions.

The analysts at Northland acknowledged some ongoing concerns, particularly with the "back book" accounting for 16% of loans, which could pose credit issues in the event of a serious recession. However, they pointed out that OneMain has made strides in improving its underwriting processes. InvestingPro data shows the company maintains strong financial health with a current ratio of 337, indicating robust liquidity to meet short-term obligations.

OneMain's earnings are reportedly on the cusp of a significant turn, as suggested by the analysts' remarks. They believe that the company is nearing an inflection point, which could lead to a notable improvement in its financial performance. Analysts forecast EPS of $6.08 for fiscal year 2025, with the company maintaining a healthy gross profit margin of 92.4%.

Additionally, the analysts highlighted the attractive dividend yield offered by OneMain. With an annual dividend of $4.16, the stock trades at just over a 10% yield, which the analysts implied offers a compelling reason for investor interest in the current market.

This upgraded rating and new price target suggest that Northland sees a stronger future for OneMain's financial health and stock performance. The firm's analysis points to a potential upside for investors, despite the acknowledgment of certain risks that still linger in OneMain's portfolio.

In other recent news, OneMain Holdings, Inc. reported significant developments in its financial activities and corporate governance. The company issued $600 million in senior notes due 2032, with a 6.750% interest rate, as part of a strategy to manage its debt portfolio. Interest on these notes will be paid semiannually starting in September 2025, and the notes carry specific covenants related to the company's financial operations. Additionally, Evercore ISI has initiated coverage on OneMain Holdings with an 'In Line' rating and a price target of $58, noting potential risks due to economic stress on its customer base but also acknowledging the company's solid profitability and growth prospects.

JMP Securities maintained its Market Outperform rating for OneMain, setting a price target of $65, citing improvements in the company's credit situation and a potential relaxation of lending restrictions if favorable economic trends continue. Furthermore, AM Best affirmed the credit ratings of OneMain's insurance subsidiaries, American Health and Life Insurance (NSE:LIFI) Company and Triton Insurance Company, highlighting their strong balance sheets and operating performance. In corporate governance news, OneMain Financial appointed Andrew D. Macdonald to its Board of Directors, bringing in his extensive experience in legal technology solutions to support the company's mission.

These developments reflect OneMain Holdings' ongoing efforts to strengthen its financial position and leadership. The company's strategic moves, such as the issuance of senior notes and board appointments, are aimed at bolstering its operations and ensuring sustainable growth.

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