BTIG Raises Price Target On LendingClub, Sees Consumer Shift

BTIG raised its price target on LendingClub Corporation LC Monday from $19 to $31 and reiterated its Buy rating.

Analyst Mark Palmer “observed that during the company’s pre-IPO venture-round capital raises, its valuation was consistently between 0.8x and 0.9x its total origination figure.

“Even the $15 price at which LC went public translated into a market capitalization of $5.4bn, or 0.87x its approximately $6.2bn of loan originations at the time of the offering, giving support to the use of a multiple of total originations as a consistent valuation methodology for the company.”

As of Monday, the company’s market capitalization was $1.59 billion

Palmer felt that as “consumer awareness of the benefits of LC versus traditional banks becomes widespread, we believe a consumer preference shift is likely to occur that would be akin to previous shifts such as those from traditional booksellers like Borders to Amazon and from video rental firms like Blockbuster to Netflix.”

The analyst note concluded with the belief that “LC is likely to use a significant portion of the estimated $751mm in cash on its balance sheet after its IPO to make accretive acquisitions that would further accelerate its already very rapid growth rate.”

LendingClub Corporation recently traded at $26.03, up 5.43 percent.