Compass Point Reiterates Buy Following Springleaf Holdings (LEAF) EPS Beat

Compass Point reiterated a Buy rating on Springleaf Holdings (NYSE: LEAF), and raised the price target to $58.00 (from $55.00), following the company's 3Q earnings report. Core EPS of $0.50 missed consensus of $0.53. Total revenues were in-line while expenses came in $4M higher than expectations. Management expects consumer finance receivables to end 2015 at $4.85-$4.95B (up from $4.70-$4.85B previously).

Analyst Michael Tarkan commented, "We are reiterating our Buy rating on LEAF following weaker-than-expected 3Q15 earnings, primarily due to higher expenses. More importantly, while uncertainty around the transformational OneMain transaction remains, we remain confident that the deal will close and our base case EPS estimate for 2017, which includes an assumption for divestitures, has improved following the movement of $608M of loans into held-for-sale (HFS). We are lowering our 2015 core EPS estimate to $2.07, from $2.13, to primarily reflect the 3Q miss and higher operating expenses, but we are raising our 2016 estimate to $5.10, from $4.85, and our 2017 estimate to $6.00, from $5.55. For now, our base case earnings scenario post-OneMain assumes the $608M of HFS receivables represents the company's divestiture for antitrust purposes. We estimate that it represents an estimated 5% of the combined pro forma receivables balance. As such, we have taken a 5% haircut to management's prior 2017 guidance range of $800-$900M. As a result of our higher post-OneMain estimates, we have increased our price target to $58, from $55."

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 $48.56 yesterday.

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