BTIG maintained a Buy rating on Lending Club (NYSE: LC) with a price target of $31. Shares were pressured after Santander Consumer USA (NYSE: SC) disclosed that it was exiting the personal lending space, noted analyst Mark Palmer. In his view, the sell-off is unwarranted.

"We view the sell-off in LC as unwarranted in that demand for the loans that LC facilitates has been robust such that the company should have no problem finding buyers for the loans that otherwise would have been directed to SC," said Palmer.

"LC in March 2013 entered into an agreement with SC in which the auto lender would purchase up to 25% of its total loan originations for three years. The company in January 2014 explained to online lending blog Lend Academy that the 25% level was a cap and that it often institutes such a limit on its large investors to ensure that its loans are available to all buyers. LC added that SC was one of multiple buyers of whole loans who would compete with each other on an equal basis," continued the analyst. 

Palmer added, "We have heard estimates from alternative lenders that demand for peer-to-peer loans has been outstripping supply by a margin of four-to-one, and that imbalance is apparently pervasive throughout the industry. Orchard Platform, which facilitates the links between marketplace lenders and institutions, said earlier this year that 50% of the whole loans facilitated by LC peer Prosper Marketplace were being acquired by investors in less than 10 seconds."

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

Shares of Lending Club closed at $14.00 yesterday.