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Why LendingClub Stock Leapt 12.4% Today

By Joe Tenebruso – May 8, 2019 at 8:15PM

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Analysts believe the peer-to-peer lending company's shares have significant upside potential.

What happened

Shares of LendingClub (LC -5.17%) popped more than 12% higher on Wednesday, following the release of the company's first-quarter results and a corresponding analyst upgrade.

So what

The online-loan marketplace's revenue rose 15% year over year to $174.4 million. Wall Street had been expecting revenue of only $169.4 million. 

The gains were fueled by an 18% rise in loan originations, to $2.7 billion. That helped drive LendingClub's transaction fees 22% higher, to $135.4 million.

Demand for new loans was particularly robust during the quarter, with loan applications surging 31%.

A person pointing to the word upgrade

Image source: Getty Images.

These strong results prompted Wedbush Securities to upgrade LendingClub's shares to "outperform" from "neutral." The investment firm also boosted its price target for the stock to $5 from $3.75. 

Wedbush believes LendingClub's improving operating efficiency will help it produce an adjusted EBITDA margin of 20% by the end of 2019. The firm also expects LendingClub to grow revenue by 12%-15% annually in the coming years.

Now what

Despite its impressive growth, LendingClub is not yet profitable. But the company is making significant progress in this regard. "The actions we are taking to simplify our cost structure underpin our goal to be adjusted net income profitable over the second half of 2019 with full-year benefits realized in 2020," CFO Tom Casey said in a press release.  

Should LendingClub achieve its profit goals, it's possible that its stock could reach -- or even exceed -- Wedbush's $5 target.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

LendingClub Corporation Stock Quote
LendingClub Corporation
LC
$11.01 (-5.17%) $0.60

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