Celebrations may be in order for LendingClub Corporation (NYSE:LC) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analysts modelling a real improvement in business performance. LendingClub has also found favour with investors, with the stock up a majestic 54% to US$24.40 over the past week. We'll be curious to see if these new estimates convince the market to lift the stock price higher still.
After the upgrade, the four analysts covering LendingClub are now predicting revenues of US$721m in 2021. If met, this would reflect a substantial 31% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 55% to US$0.48. Yet before this consensus update, the analysts had been forecasting revenues of US$538m and losses of US$1.60 per share in 2021. We can see there's definitely been a change in sentiment in this update, with the analysts administering a sizeable upgrade to this year's revenue estimates, while at the same time reducing their loss estimates.
The consensus price target rose 35% to US$23.20, with the analysts encouraged by the higher revenue and lower forecast losses for this year. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values LendingClub at US$28.00 per share, while the most bearish prices it at US$14.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. One thing stands out from these estimates, which is that LendingClub is forecast to grow faster in the future than it has in the past, with revenues expected to display 71% annualised growth until the end of 2021. If achieved, this would be a much better result than the 15% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 9.6% per year. So it looks like LendingClub is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The most important thing here is that analysts reduced their loss per share estimates for this year, reflecting increased optimism around LendingClub's prospects. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, LendingClub could be worth investigating further.
That's a pretty serious upgrade, but shareholders might be even more pleased to know that forecasts expect LendingClub to be able to reach break-even within the next few years. You can learn more about these forecasts, for free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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