Needham & Company Raises Price Target as LendingTree's (TREE) Strong 3Q Revenue Beat Shows Drive to Push Sales
Needham & Company reiterated a Buy rating on LendingTree (NASDAQ: TREE), and raised the price target to $140.00 (from $108.00), following the company's 3Q15 earnings results. Tree posted strong 3Q15 revenue of $69.8M, well above consensus of $60.7M. Analyst Kerry Rice believes that the strong results this quarter are primarily driven by Tree’s continued push on sales effort, combined with management’s ability to drive better conversion rates and expand lender/consumer user base.
Rice commented, "Tree beat 3Q15 revenue and EBITDA expectations and raised guidance for FY15, as well as provided initial FY16 guidance above expectations. Tree delivered across businesses with Mortgage, Personal Loans, and Credit Cards exhibiting tremendous growth. Mortgage revenue accelerated 38% y/y, which we believe was driven by incremental revenue from large retail banks for its call center and local introductory products. Non-mortgage revenue accelerated to 175% y/y, driven by Personal Loans and Credit Cards. While we expect a strong 4Q15 and the continuation of momentum into FY16, we believe our estimates could prove conservative, primarily due to the continued ramp in the Personal Loans and Credit Card businesses. We also expect EBITDA margin to improve modestly, even with significant growth in sales and marketing."
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Shares of Tree.Com closed at $98.00 yesterday.