Citi Downgrades LexinFintech Holdings (ADR) (LX) to Neutral, '1Q22 miss on sluggish loan vol. growth and higher provisions'

May 31, 2022 11:00 AM EDT
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Price: $1.53 -1.29%

Rating Summary:
    7 Buy, 2 Hold, 1 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 12 | Down: 16 | New: 15
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Citi analyst Judy Zhang downgraded LexinFintech Holdings (ADR) (NASDAQ: LX) from Buy to Neutral with a price target of $2.44 (from $4.29).

The analyst comments "LX reported 1Q22 non-GAAP NPAT of RMB120mn (-62.1% q/q; -84.3% y/y), accounting for 5.8% of the FY22 consensus estimate. Net revenue (net of provision) plunged 11.5% q/q and 35.6% y/y to Rmb1.2bn on higher provisions for new loans, which was directly recognized as a deduction to revenue, and weaker loan volume growth of -0.9% q/q -19.7% y/y to RMB43.2bn (c.18% of FY22 guidance). Operating profit dived 64.2% q/q (or -88.9% y/y) to RMB94mn, with operating margin falling 11.6ppt q/q and 37.9ppt y/y to 7.9%, mainly on higher S&M and processing and servicing expenses as a % of net revenue. Despite soft loan volume growth in 1Q22, mgmt. maintains loan origination volume growth guidance at 10% y/y for 2022 (i.e. loan volume of c. RMB235bn in 2022). We downgrade our rating to Neural on dimmer near-term earnings outlook."

For an analyst ratings summary and ratings history on LexinFintech Holdings (ADR) click here. For more ratings news on LexinFintech Holdings (ADR) click here.

Shares of LexinFintech Holdings (ADR) closed at $2.37 yesterday.

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