Online financial marketplace provider Lendingtree (TREE) is benefiting from the improvement in demand trends in its consumer segment, which provides a range of conditional loan offers for credit cards, personal loans, small business loans, student loans, car loans, deposit accounts, and other credit services like credit repair and debt settlement.
Moreover, growing competition among lenders is serving as a tailwind for mortgage revenues. Also, the recent rate cuts have led to the revival of Lendingtree’s mortgage business, along with a spurt in refinancing. (See Lendingtree stock chart on TipRanks)
Lendingtree recently delivered strong second-quarter 2021 results, beating consensus estimates on both the top line and bottom line fronts. Encouraged by the results, Needham analyst Mayank Tandon reiterated a Buy rating on the stock.
Justifying his rating, he said, “Given the improving fundamentals and strong secular trends driving consumer shopping for financial products using digital channels, we believe that Lendingtree is making steady progress towards returning to a post-pandemic growth trajectory of 15-20% while steadily expanding margins.”
However, citing lower valuations for financial marketplace stocks, Tandon cuts his price target to $275 from $300, implying 33% upside potential.
Notably, the analyst is positive about Lendingtree’s third-quarter outlook. The management of the company expects sequential growth in consumer and insurance revenues.
Tandon notes, “While tightening credit markets/FI marketing budgets pressured Lendingtree’s fundamentals at the onset of the pandemic, we are encouraged by the continued progress and upbeat outlook which gives us confidence that Lendingtree has turned the corner and is well-positioned to return to steady growth.”
The analyst also believes that with the pandemic slowing down, the economy is showing signs of improvement. This is strengthening mortgage and insurance segments, which is leading to a solid recovery in the consumer segment.
Consensus among analysts for Lendingtree is a Strong Buy based on 5 unanimous Buys. The average Lendingtree price target of $291.6 implies 41% upside potential.
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
