Nucor earnings beat by $0.08, revenue fell short of estimates
On Wednesday, Needham analysts raised the stock rating for Open Lending (NASDAQ:LPRO) from Hold to Buy, setting a new price target at $7.00. The upgrade follows observations of stabilization and modest improvement within the auto lending market, which has bolstered the firm’s confidence in Open Lending’s business outlook. The stock has shown strong momentum, gaining nearly 11% in the past week according to InvestingPro data, while maintaining a healthy current ratio of 9.42x.
Needham’s analysis indicates that loan certification volumes for Open Lending are expected to improve as the fiscal year 2025 progresses. This expectation is supported by channel checks with users of the company’s core product. The analysts also noted a reduced concern for negative fair value revisions that had previously been affected by profit share issues and weak collateral values. InvestingPro analysis shows the company maintains strong profitability with a 76% gross margin, though investors should note that 5 analysts have recently revised their earnings expectations downward.
The decision to upgrade comes after Open Lending’s shares experienced an approximate 8% decline since Needham’s downgrade on July 22, 2024. This performance contrasts with the S&P 500’s 9% increase over the same timeframe. According to Needham, Open Lending’s current valuation presents an attractive opportunity for investors, with the company trading at an enterprise value to FY26 EBITDA multiple of around 10 times, and net cash comprising over 15% of the market capitalization.
The new $7 price target is based on an enterprise value to FY26 EBITDA multiple of 13 times. Needham’s analysts believe that the current market conditions, along with Open Lending’s financials, create a favorable setup for the company’s stock.
In other recent news, Open Lending Corporation reported mixed Q3 2024 financial results, with a total revenue of $23.5 million and adjusted EBITDA of $7.8 million. A significant factor in the quarter’s performance was a $7 million negative adjustment in profit share estimates linked to higher delinquencies from loans originated in 2021 and 2022. Despite this, Open Lending signed 21 new customers during Q3 and launched a new technology to automate income and employment verification. The company certified 27,435 loans in Q3, a decrease from the same quarter in the previous year. Operating expenses were reported at $15.5 million for the quarter. Looking ahead, the company’s guidance for Q4 2024 includes 20,000 to 24,000 certified loans, $22 million to $26 million in total revenue, and $7 million to $10 million in adjusted EBITDA. Open Lending remains optimistic about future market conditions and its ability to support near and non-prime borrowers amid these recent developments.
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