Springleaf Holdings Will Outperform Market, KBW Says

• Springleaf Holdings Inc LEAF shares have declined 6 percent since July 6, trading below the $48 mark since the first week of August.
• Keefe, Bruyette & Woods analyst Sanjay Sakhrani upgraded the rating for the company from Market Perform to Outperform, while raising the price target from $53 to $55.
• Sakhrani believes the recent pullback of Springleaf Holdings’ shares offers an attractive entry point, with added upside if the OneMain deal closes at current accretion estimates.

Springleaf Holdings’ shares have pulled back 17 percent since their high in late March. The company’s shares currently have upside of approximately 20 percent to the new price target, analyst Sanjay Sakhrani said.

Although the company has not announced the close of the OneMain acquisition, Sakhrani believes that the deal will ultimately be successfully completed. If the OneMain deal gets approved by the Department of Justice and State Attorney Generals, with no changes to the management’s accretion estimate, there is further upside to the price target, the analyst added.

Sakhrani said, however, that if the deal fails to close, Springleaf Holdings has the ability to use its excess capital for share repurchases and the downside in its shares could be in the mid-$30s range, depending on the price at which the shares are repurchased.

In the report Keefe, Bruyette & Woods noted, “We believe current levels present an attractive entry point in LEAF shares given our view that the deal will be ultimately consummated and the current upside potential is greater than the downside risk.”