LendingClub To See Earnings Growth As Net Interest Margin Inflects Higher Next Year: Analyst Forecasts Upside
Portfolio Pulse from Nabaparna Bhattacharya
Piper Sandler analyst Brad Capuzzi initiated coverage on LendingClub Corporation (NYSE:LC) with an Overweight rating and a $8 price target, citing potential earnings growth due to higher net interest margins in 2024. The growth is expected from lower funding costs, cost reductions, and moderating net charge-offs. LC's undervaluation at 0.55x P/TBV and an estimated 10% ROTCE presents a significant upside, with the possibility of further improvement through a share repurchase program and reinvestment into higher-yielding assets. Capuzzi forecasts a 40 bps NIM expansion through 2024-2025 and a 110 bps ROA expansion in 2025. FY23 revenues are expected to be $861 million with EPS of $0.31. LC shares rose 10% to $6.14.
November 28, 2023 | 7:17 pm
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POSITIVE IMPACT
LendingClub Corporation is expected to see earnings growth with a higher net interest margin in 2024, lower funding costs, and cost reductions. The stock is currently undervalued and has a significant upside potential according to Piper Sandler's analyst, with a price target of $8.
The positive analyst coverage from Piper Sandler, including an Overweight rating and a price target that suggests substantial upside, is likely to instill investor confidence and drive short-term price appreciation. The detailed forecast of earnings growth and margin expansion further supports the bullish outlook. The recent 10% rise in share price upon the news indicates strong market reaction to the analyst's coverage.
CONFIDENCE 85
IMPORTANCE 90
RELEVANCE 100