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On Monday, Northland reaffirmed its Outperform rating and $60.00 price target for Lending Tree shares, following a favorable legal ruling. According to InvestingPro data, analysts are increasingly optimistic about the company, with five analysts recently revising their earnings estimates upward. The stock, currently trading at $46.84, appears undervalued based on InvestingPro's Fair Value analysis. The 11th Circuit Court's decision negated the need for a proposed Federal Communications Commission ( FCC (BME:FCC)) rule change that would have required lead generators to obtain explicit consent before contacting consumers. This rule was initially slated to take effect in late January 2025 and would have significantly impacted Lending Tree's operations by limiting lead generation capabilities, restricting the resale of leads, and reducing reliance on third-party lead generators.
The court's ruling favored IMC, concluding that the FCC overreached its authority under the Telephone Consumer Protection Act (TCPA). It was determined that the FCC's consent restrictions were at odds with the established definition of "prior express consent" and that the FCC's distinction between telemarketing/advertising and non-telemarketing/non-advertising calls was improper. Additionally, the court found that the 2023 FCC Order imposed content-based restrictions on marketing calls without sufficient justification, violating the First Amendment.
This legal victory means that Lending Tree will not be required to implement an additional consent step for customers to communicate with individual banks, lenders, or insurers. Although difficult to quantify, Northland views this as an excellent outcome for Lending Tree, which maintains a robust gross profit margin of 95.5%. The company's market capitalization stands at $623.61 million, with InvestingPro analysis indicating a "FAIR" overall financial health score. Furthermore, on January 24, 2025, the Active Chief of the Consumer and Governmental Affairs Bureau delayed the enforcement of the FCC rule revisions by 12 months, pushing the new effective date to January 26, 2026.
Northland analysts believe that the 11th Circuit Court's decision will override this postponement and that the issue will likely be resolved in favor of Lending Tree. This eliminates the previous anticipation that Lending Tree might need a stay to continue operations. The resolution of these uncertainties paves the way for Lending Tree's sustained growth and operational stability. InvestingPro subscribers can access over 10 additional key insights about LendingTree, including detailed financial health metrics and growth projections. The company's next earnings report is expected on March 4, 2025, with analysts forecasting a return to profitability this year.
In other recent news, Lending Tree has been in the spotlight following several noteworthy developments. The company's third quarter 2024 earnings call reported a 23% year-over-year increase in adjusted EBITDA to $27 million, and a record $41 million in Variable Marketing Margin, driven by a significant 210% growth in auto insurance quotes revenue. Additionally, Lending Tree's consumer business and home segment saw revenue increases of 6% and 5% respectively.
The company's CEO, Douglas R. Lebda, has had his contract extended through December 31, 2025, with a base salary increase from $750,000 to $800,000, reflecting the company's commitment to its leadership. Northland, an independent investment banking and advisory firm, has also upgraded Lending Tree's stock rating from Market Perform to Outperform, setting a new price target of $60.00.
Northland's analysts anticipate growth in the Insurance and Consumer sectors for Lending Tree, as well as improvements in the company's adjusted EBITDA margins. These developments have led to a positive outlook for Lending Tree in 2025, based on the company's strategic focus and recent financial progress. Despite challenges with a negative earnings per share of -$2.77 over the last twelve months, analysts have revised their earnings expectations upward for the upcoming period.
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