LendingClub (NYSE:LC) is attractively valued and has earnings upside, according to Piper Sandler analysts who initiated coverage of the stock with an Overweight rating and $8 per share price target on Tuesday.
The firm said the company is well-positioned to see earnings growth as net interest margin inflects higher in 2024 due lower funding costs, significant cost reductions, and net charge-offs moderating in the back half of 2024.
"We believe LC has the opportunity to lower funding costs given the deposits are fully funding loans held for investment," wrote the analysts at Piper Sandler.
"In addition, we believe the stock is undervalued, trading at 0.55x P/TBV, given we estimate the company can produce a 10% ROTCE. Over the long-term, we expect ROTCE to trend up to the low to mid-teens and should warrant a P/TBV multiple near 1.0x, implying 50%+ upside to where the stock is trading today," they added.
LendingClub shares are up around 2.9% in premarket trading, currently near the $5.75 per share mark. However, this year it has declined by almost 38%.