LendingClub stock jumps after KBW upgrades on Fed easing path
LendingClub's stock rose 5.3% following KBW's upgrade from Market Perform to Outperform, citing benefits from the Federal Reserve's easing policies. Analyst Timothy Switzer noted that lower rates would enhance personal loan demand and credit performance. Additionally, LendingClub's recent product innovations and the anticipated return of banks to secondary markets are expected to drive revenue growth, with EPS projected to increase over 200% from 2024 to 2026. KBW recommends a long position in LendingClub against a short position in SoFi Technologies.
- LendingClub (NYSE:LC) climbed 5.3% in Thursday morning trading after KBW upgraded the lending platform's rating to Outperform from Market Perform as it stands to benefit from the Federal Reserve's policy easing.
- Lower rates are positive for personal loan demand, secondary market pricing, deposit rates/net interest margin, and credit performance, analyst Timothy Switzer wrote in a note to clients.
- Meanwhile, LendingClub's (LC) recent product innovations, including structured certificates, seasoned loans, and new consumer offerings, should also provide a boost, as well as the eventual return of banks to the secondary markets.
- KBW expects revenue growth to fuel EPS growth to over 200% from 2024 to 2026, with return on tangible common equity nearing 11%.
- The firm recommends a pair trade of long LendingClub (LC) vs. short SoFi Technologies (SOFI).
- KBW's Outperform rating on LC aligns with the SA Quant rating of Strong Buy and the average Wall Street rating of Buy.