DOJ Approves Springleaf Holdings' (LEAF) OneMain Acquisition; Reiterates Outperform

FBR Capital reiterated an Outperform rating and $65.00 price target on Springleaf Holdings (NYSE: LEAF) as the DOJ approves the company's acquisition of OneMain. The deal is expected to close by the end of November. As part of an agreement with the DOJ, Springleaf will sell 127 existing branches in 11 states holding approximately $608 million in receivables. The branch divestiture is expected to be completed on April 1, 2016.

Analyst Bob Ramsey commented, "We reiterate our Outperform rating and $65 price target on LEAF, equal to 10.0x our 2017 EPS estimate of $6.50. At long last, LEAF's acquisition of OneMain has been approved by the DOJ and is expected to close by the end of November. The deal makes sense to us given the significant cost saves, as well as the opportunities for growth—not only has Citigroup arguably underinvested in OneMain, but LEAF brings additional products, like auto, that should boost growth. On a pro forma basis, the company will have a branch within 25 miles of 87% of the U.S. population. To reflect one month of combined earnings, we raise our 4Q15 EPS estimate to $1.60 (from $1.45). We also adjust our 2016 EPS estimate to $5.50 from $5.75, largely to reflect the required asset divestiture, but reiterate our 2017 estimate of $6.50."

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 $49.23 yesterday.

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