Springleaf (LEAF) Accretion is Imminent - Jefferies

Jefferies analyst, John Hecht, took Springleaf Holdings (NYSE: LEAF) management on a non deal roadshow and is now aggressively recommending shares due to given its attractive organic growth and imminent and material accretion that will accrue to the company as it integrates the OneMain franchise. He raised CY16 EPS from $4.89 to $5.31 and initiated 2017 EPS of $6.36.

For OneMain, he is assuming $275M of cost synergies realized and $275M of 1x transaction expenses.

LEAF is now the largest operator within the installment arena with 1800+ stores in 44 states. Approximately 87% of the US population lives within 25 miles of a branch, and that LEAF has enormous opportunity to cross sell products across the 2 merging branch networks.

The analyst believes the company is well positioned for consistent growth using its online platform to drive new customer growth. LEAF's average receivables per branch have grown at a CAGR of ~21%, and he believes the combined company trades at a tremendous value in consideration of its pro forma earnings profile and its long term secular growth opportunities.

Applying a target multiple of ~13x FY16E EPS of $5.31, he derives a $66 target price. The Buy rating was maintained.

For an analyst ratings summary and ratings history on Springleaf Holdings click here. For more ratings news on Springleaf Holdings click here.

Shares of Springleaf Holdings closed at $47.54 yesterday.

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