Wall Street Analyst References 'Journey' To Show Excitement For Springleaf Holdings

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  • Following the recent pullback, Springleaf Holdings Inc LEAF shares are down 20 percent, after touching a high of $53.60 on March 23.
  • Compass Point’s Michael Tarkan initiated coverage of Springleaf Holdings with a Buy rating and a price target of $55.
  • Following the recent pullback, the current valuation appears attractive, Tarkan said.

Springleaf Holdings is a leading consumer finance company, offering loan and insurance products to subprime customers through its branch network and online platform. Analyst Michael Tarkan believes that the company is uniquely positioned to benefit from a number of structural shifts in the consumer lending segment.

“Springleaf is in a sweet spot competitively as it is positioned between a payday lending industry that is facing increasing regulatory pressure and traditional banks that remain reluctant to lend to the company’s targeted borrower base,” Tarkan wrote.

The company’s proposed acquisition of OneMain Financial from Citigroup Inc C is expected to be transformational, by enhancing the former’s branch network and significantly expanding its earnings.

“Although we believe the deal timeline is likely to be lengthened due to the ongoing antitrust Review, we still believe there is an 80% chance the deal is ultimately completed in some form,” the Compass Point report stated.

The core EPS estimates for 2015, 2016 and 2017 are $2.13, $4.85, and $5.55, respectively. “Our model assumes the OneMain transaction closes but the company has to divest assets for antitrust purposes,” Tarkan added.

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Posted In: Analyst ColorInitiationAnalyst RatingsCompass PointMichael Tarkan
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