Compass Point Research issued a company update on LendingClub Corp LC amid valuation concerns due to the company's business risk profile. Compass Point maintained Lending Club ‘s Sell rating with a $9 price target.
Michael Tarkan, Isaac Boltansky, and Andrew Eskelsen, analysts at Compass Point, wrote, "...while the thematic risks facing the company have not yet manifested themselves in quarterly results, we expect ongoing fears surrounding competition and regulation, as well as increasing consumer credit and funding uncertainty, to continue to pressure LC shares in 2016. Ultimately, we expect these risks to translate into a more muted earnings trajectory through slower growth and higher expenses."
Compass Point highlighted 3 primary risks to Lending Club in 2016:
1. Regulation
Analysts believe that regulations regarding discretionary lending to individuals may grow due to concerns over issues such as terrorism financing. With increased supervision from the government, Lending Club's business operations may be damaged.
2. Competition
As new competitors enter the consumer lending space, Compass Point sees the potential for increased marketing costs and a decrease in market share for Lending Club.
3. Consumer Credit
Compass Point notes that while Lending Club's business model has been successful in positive economic times, it hasn't been tested in poor economic conditions and instances of poor consumer credit. Going forward if a recession occurs, individuals may be unable to repay their loans and performance of Lending Club may be called into question.
Currently, Lending Club is trading at $10.50, down 2.61 percent.
Market News and Data brought to you by Benzinga APIs© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Loading...
date | ticker | name | Price Target | Upside/Downside | Recommendation | Firm |
---|
Posted In: Analyst ColorPrice TargetReiterationAnalyst RatingsAndrew EskelsenCompass PointIsaac BoltanskyMichael Tarkan
Benzinga simplifies the market for smarter investing
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
Join Now: Free!
Already a member?Sign in