Northland Capital Markets Downgrades Lending Tree (TREE) to Market Perform

May 6, 2022 8:48 AM EDT
Get Alerts TREE Hot Sheet
Price: $43.82 --0%

Rating Summary:
    11 Buy, 5 Hold, 1 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 3 | Down: 11 | New: 10
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Northland Capital Markets analyst Mike Grondahl downgraded Lending Tree (NASDAQ: TREE) from Outperform to Market Perform with a price target of $90.00 (from $140.00).

The analyst comments "After this recent pressure from Mortgage and Insurance, we believe investors have some time. While we had gotten more positive last year when we upgraded from our Underperform rating we were way to early. After calling out that we believe competitors have multiplied, dependence on search leads to structural challenges, and significant investments are needed to maintain or catch up, we tended to think these were being dealt with and on the call, it sounded like the investment phase had some ways to go. But these are clearly still part of story, and when you add minimal Adj. EBITDA growth the last 3 years, Adj EBITDA margins not really improving, leverage at roughly 3.5x, its seems like there is no easy fix. Mortgage has headwinds, Insurance is slower to recover and margins are softer, these make up 60% of the business. Credit Card at 10% is also slow to recover. TREE also reduced their workforce by ~75 employees to moderate growth in cost structure. See prior notes for more color on these issues but the above leads us to downgrade to Market Perform."

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

Shares of Lending Tree closed at $80.78 yesterday.

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