BTIG Reiterates Neutral Rating on OneMain (OMF)

BTIG analyst Vincent Caintic reiterated a Neutral rating on OneMain (NYSE: OMF).

The analyst comments "Our analysis of August monthly data implies net losses that are inline with our 7.20% modeled estimate for 3Q24, and consistent with 1Q24 delinquencies. We are therefore comfortable with our current 3Q24 EPS estimate of $1.16. Our full-year 2024 net losses remains at 8.15%, at the higher end of OneMain's target 7.7-8.3% range. August 30-89 day delinquencies climbed 10bps m/m, which is a deceleration from the +26bps m/m in July and the first time in four months that the DQs are no longer accelerating m/m. Delinquency levels are now back to January 2024. Losses increased 12bps m/m in August, which is also a deceleration from the +28bps in July after three previous consecutive months of increasing. This lends credibility to CEO Doug Shulman's comments at a conference webcast last month, that OneMain's near-prime consumer is stabilizing. Still, even the decelerating increases, we would like to see the numbers improve on an absolute basis, because current implied loss levels are still well above OneMain's long- term mid-high 6%. The August DQs are actually the 2nd highest recorded through 2016 (when Springleaf closed its acquisition of OneMain). We do still question whether our 2025 loss rate expectation of 6.85% (back inline with guidance) may be too optimistic. The loss trend may necessitate even tighter underwriting, which will slow the growth of the "front book" and shallow the improvement in credit trends. We are hosting OneMain's CFO Jenny Osterhout at our BTIG Financials Conference this Thursday, September 19. Please contact your BTIG representative to register. Our valuation of OMF shares is based on a forward multiple applied to P/E. OMF shares currently trade at 9.3x our 2024E EPS and 6.1x our 2025E EPS, which we think is richly valued compared to historical ranges."

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

Shares of OneMain closed at $48.53 yesterday.

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