Lending Club (LC) PT Sliced to $16 at Compass Point Post Q4
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Compass Point analyst Michael Tarkan reiterated a Sell rating and lowered his price target on Lending Club (NYSE: LC) to $16.00 (from $19.00) following Q4 results.
Tarkan commented, "We are reiterating our Sell rating on LC and are lowering our price target to $16, from $19, after the company reported relatively in-line 4Q14 earnings but provided generally muted 2015 guidance. We are also cutting our 2015, 2016, and 2017 adjusted EPS estimates to $0.08, $0.20, and $0.50, respectively, from $0.20, $0.45, and $0.70. We expect shares to be weak as ongoing investments are expected to erode near-term profitability, and while 2015 revenue guidance was in-line with consensus, the Street was likely looking for more.
He added, "Ultimately, we expect the company to continue to exhibit strong growth as the platform gains further traction, but we remain concerned with several factors related to the untested nature of the business model, including: competition, regulation, credit performance, demand in rising rate environments, and concentration. With shares already trading at 14x FY16E revenue and 118x EPS, risk/reward remains unfavorable."
Shares of Lending Club closed at $23.65 yesterday.
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