Live Oak Bancshares (LOB) PT Lowered to $44 at Piper Sandler

Piper Sandler analyst Crispin Love lowered the price target on Live Oak Bancshares (NYSE: LOB) to $44.00 (from $50.00) while maintaining a Neutral rating.

The analyst commented, "Shares were down 8%+ in mid-day trading following the conference call. We believe the stock reaction is driven by the elevated provision, which drove the core miss. The higher provision was related to three relationships that were isolated and management called the provision increase to be a "blip" as they remain confident on the broader portfolio. With that said, we believe investors are looking for stable to improving credit trends without "one offs." On the positive side, LOB had a record quarter for originations and PPNR came in well above our estimate. We are decreasing 2024 and 2025 EPS estimates to $1.72 and $2.60 from $2.03 and $2.78. We are decreasing our PT to $44 from $50, which is based on ~17x (~18x prev.) 2025E. The lower multiple is driven by recent credit one-off
relationships that could keep the multiple capped over the near-term."

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