BTIG Affirms LendingClub (LC) at 'Buy'; Q2 Provided Damage Assessment with One Notable Casualty

August 9, 2016 8:57 AM EDT
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BTIG affirms LendingClub (NYSE: LC) at Buy with a price target of $9 following Q2 results and resignation of CFO Carrie Dolan.

Analyst Mark Palmer commented, LendingClub Corporation’s (LC) 2Q16 report was essentially a damage assessment for investors in the aftermath the company’s revelation on May 9 of a scandal involving misallocated loans and the resignation of former CEO and management’s subsequent acknowledgement of their expectation that 2Q16 loan originations would drop by approximately one-third sequentially. While the damage was not as significant as expected from a loan origination standpoint, it did have an apparent casualty: CFO Carrie Dolan.

We believe that in terms of gauging LC’s longer-term prospects there were a couple of more important takeaways: the company’s loan originations declined sequentially during 2Q16 by a better-than-expected 28.8% to $1.955bn, exceeding our estimate of $1.843bn, and management reported that 15 of its top 20 investors are back on its marketplace platform after backing away in May. Moreover, management said loan origination volume had gained during June and that origination momentum had continued during July, the analyst noted.

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