LendingClub (LC): Raising PT to $6.50 - FBR
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FBR Capital analyst, Bob Ramsay, reiterated his Market Perform rating on shares of Lending Club (NYSE: LC) after performing an analysis of the company's credit quality.
The analyst believes that LC's longer-term success will ultimately depend on credit quality and the predictability of investor returns. Given concerns about the general U.S. consumer and LC's F&G loan performance, the analyst has taken a closer look at LC's credit trends, investor returns, loan product details, and origination mix shifts.
The analyst stated "Despite what appears to be mostly stable trends on the credit front, we remain on the sidelines at current levels, since it may take time for investors—particularly banks— to return to 1Q16 levels of funding. The drop in originations and increase in expenses have also pushed out profitability, challenging valuation off of earnings or EBITDA".
The analyst raises his price target to $6.50 (from $4.00 equal to 2.7x TBV due to expanding market multiples.
Shares of Lending Club closed at $5.50 yesterday.
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