FBR Capital Downgrades On Deck Capital (ONDK) to Market Perform
FBR Capital downgraded On Deck Capital (NYSE: ONDK) from Outperform to Market Perform with a price target of $6.50 (from $11.00).
Analyst Bob Ramsey commented, "We downgrade shares of On Deck Capital to Market Perform (from Outperform) and reduce our price target to $6.50 (from $11) given a longer runway to sustainable profitability. Management cut 2016 EBITDA guidance by $50 million, a significant amount for a company with $260 million of TTM revenues. The weaker outlook reflects a reduced volume of loans sold, narrower GOS margins, and slower origination growth given weaker Marketplace loan demand and tighter underwriting standards. We like ONDK's business model, particularly its ability to partner with banks to provide lending as a service, but the near-term volatility in earnings and lack of profitability are concerns. Due to slower growth and lower gainon-sale margins, we reduce our 2016 and 2017 EPS estimates to ($0.70) and $0.00, from ($0.05) and $0.25, respectively."
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Shares of On Deck Capital closed at $8.30 yesterday.