Trump announces trade deal with EU following months of negotiations
On Monday, Stephens reaffirmed its Overweight rating and $65.00 price target for Lending Tree (NASDAQ:TREE), a fully domestic online marketplace that connects consumers with lenders and insurers. Currently trading at $45.96, InvestingPro analysis suggests the stock is undervalued, with 4 analysts recently revising their earnings expectations upward. The company is viewed as well-positioned amidst escalating global trade tensions due to its role in facilitating consumer access to credit and savings opportunities.
According to Stephens, while Lending Tree’s marketplace dynamic involves both consumers and financial service providers, the current economic climate could lead to an overall positive impact for the company. With impressive revenue growth of 33.86% and an industry-leading gross profit margin of 96%, increased consumer shopping activity and the possibility of lower interest rates are seen as potential benefits, especially for Lending Tree’s Mortgage business, which is significantly focused on refinancing. The analyst noted that the Mortgage refinancing revenue is currently about one-tenth of what it averaged from 2017 to 2021.
Despite potential challenges from the trade wars, such as tightening standards for lenders and insurers, Stephens believes Lending Tree’s business model is resilient. With EBITDA of $59.62M and a market capitalization of $615.57M, the firm also highlighted various initiatives that Lending Tree has underway and expressed confidence in the guidance for 2025, suggesting that there is already a buffer factored into the company’s projections. InvestingPro subscribers can access 8 additional key insights about TREE’s financial health and growth prospects in the comprehensive Pro Research Report.
Furthermore, Stephens finds the valuation of Lending Tree’s stock appealing, trading at approximately 7 times forward EBITDA compared to its long-term average of around 15 times. The analyst’s commentary underscores a belief in the strength and defensibility of Lending Tree’s business model against a backdrop of global uncertainty.
In summary, Stephens remains optimistic about Lending Tree’s prospects, reiterating an Overweight rating and maintaining a $65.00 price target on the company’s stock. The analysis points to the company’s domestic focus, ongoing initiatives, and current valuation as reasons for the positive outlook.
In other recent news, LendingTree Inc. reported a strong fourth quarter of 2024, significantly surpassing earnings expectations with an earnings per share (EPS) of $1.16 against a forecasted loss of $0.14. Revenue also exceeded projections, reaching $261.5 million compared to the anticipated $230.9 million. S&P Global Ratings upgraded LendingTree’s issuer credit rating to ’B’ from ’B-’, highlighting improved leverage and free operating cash flow to debt coverage. Analysts from Needham and Keefe, Bruyette & Woods adjusted their price targets for LendingTree, with Needham reducing it to $65 while maintaining a Buy rating, and KBW lowering it to $66 but still rating it Outperform. Meanwhile, Truist Securities raised its price target to $72, maintaining a Buy rating, citing robust fourth-quarter results and a promising outlook for 2025. LendingTree anticipates double-digit growth across its consumer, home, and insurance segments for the upcoming fiscal year, driven by increased demand for home equity and small business loans. The company is also expected to continue reducing its debt, aided by strong cash flow and a favorable debt repayment schedule.
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