LendingClub shares surged after the company’s latest earnings report but have since reversed course. The stock spent most of Friday in the red, falling by as much as 2% at one point before recovering in the afternoon. As of this writing, the stock is up 0.09% at $5.47. The online lending platform’s second quarter earnings results were mixed, as were analyst reports following the print. At least one firm raised its price target on Friday, while another lowered its target and a third left its target the same earlier in the week.
LendingClub price target raised by Susquehanna
In a report dated August 12, Susquehanna analyst James Friedman raised his price target for LendingClub from $5 to $6 per share but maintained his Neutral rating on the stock following a meeting with CEO Scott Sanborn and outgoing CFO Carrie Dolan. He believes the worst is over for the company because lenders are starting to return to its platform. However, he adds that Sanborn said that there are still “some embers” but that “the fire from last quarter is out.”
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Friedman reports that 16 of LendingClub’s top 20 investors before the May snafu involving the improper allocation of loans have returned, which means the company has already drawn back one additional investor on top of the 15 it mentioned in its second quarter earnings report. The lending platform has been running incentive programs to encourage the lenders to return, and those programs appear to be working. The programs involve selling loans at a lower cost than what their actual value is.
LendingClub is now looking for “stickier, committed loan funding as part of its effort to diversify its lender base,” Friedman adds.
LendingClub price target slashed by Canaccord
On August 9, Canaccord Genuity analyst Michael Graham and team slashed their price target for LendingClub from $7 to $6 per share and maintained their Hold rating on the stock. They expect the recent choppiness to continue as the company keeps trying to reassure investors that its internal controls have been restored.
LendingClub did manage to beat guidance, but its growth has decelerated significantly, indicating that investor activity paused during the second quarter. Originations beat consensus, but transaction revenue plunged 22% sequentially. Legal, advisory and severance costs pressured its margins as well.
LendingClub’s originations look “promising”
In a report dated August 8, BTIG analyst Mark Palmer highlighted LendingClub’s originations, which fell 28.8% sequentially to $1.966 billion, which beat consensus. He also noted that the company said loan origination volume increased in June and that the momentum had continued in July.
Palmer also mentioned the departure of Dolan, as he suggested that she was “an apparent casualty” from the ongoing situation there. He noted that she was the only member of senior level management left from the previous regime as Sanborn has been shaking things up. However, the Canaccord Genuity team said in their report that her departure had been planned prior to the disclosures about the loan misappropriations that came in May. She is reportedly leaving to pursue another opportunity.
Palmer continues to rate LendingClub as a Buy with a $9 price target.