Street Initiates Coverage of loanDepot (LDI) With Ratings Leaning Positive

March 9, 2021 9:13 AM EST
Get Alerts LDI Hot Sheet
Price: $19.89 -0.45%

Rating Summary:
    7 Buy, 4 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 23 | Down: 22 | New: 25
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loanDepot (NYSE: LDI) made its public trading debut last month by raising “just” $54 million. The company sold shares at $14.00 apiece, below the previously-communicated range of $19.00 to $21.00.

The company initially wanted to raise $362.5 million by selling 17 million shares at $21.00. However, the company opted to sell fewer shares at a lower price, signaling weaker-than-expected interest.

Shares of LDI closed at $19.22 yesterday.

This week, the Street has initiated the coverage of LDI with ratings mostly leaning positive. Firms Citi, Credit Suisse, Barclays, Jefferies, JMP Securities, and Raymond James started the coverage with a “Buy” or equivalent rating, while UBS, Piper Sandler, Goldman Sachs, and Morgan Stanley opted to stay on the sidelines.

Jefferies analyst Ryan Carr is bullish on LDI amid innovative technology capabilities, robust purchase mix, and relatively recent entrance into the industry. All these factors help to position LDI “for significant growth in what we expect to be a record mortgage market in '21/22.”

“LDI has exhibited significant market share gains since 2010, expanding by 70bps+ in 2020, and we forecast 170bps+ of gains by 2022. While LDI is the #8 mortgage lender in the US, the company is a relatively new entrant in an established industry and still retains a smaller share of the market. Having emerged from 2020 in a position of strength, we think LDI will continue to expand this share at a proportionate pace, and continue to build up to a position comparable to larger peers,” Carr said in a note sent to clients.

He initiated at a “Buy” with a price target of $33.00 per share.

Carr’s colleague at Piper Sandler, Kevin Barker, is less bullish on LDI, hence the “Neutral” rating and PT of $20.00. Overall, Barker believes the company has generated “significant market share gains in the highest margin origination channel.”

“We believe some franchise value is embedded in the stock price today especially after taking into account the limited stock available to trade. We also note the company tends to generate more refinance volume compared to the industry and therefore, could have greater cyclicality versus peers. We would be more positive if the company can continue to generate market share gains despite higher rates,” Barker wrote in a research note issued to clients.

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