Things Look Grim For LendingClub Corporation (NYSE:LC) After Today's Downgrade

Market forces rained on the parade of LendingClub Corporation (NYSE:LC) shareholders today, when the analysts downgraded their forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.

Following the latest downgrade, the current consensus, from the six analysts covering LendingClub, is for revenues of US$1.0b in 2023, which would reflect a painful 20% reduction in LendingClub's sales over the past 12 months. Statutory earnings per share are supposed to nosedive 81% to US$0.52 in the same period. Previously, the analysts had been modelling revenues of US$1.2b and earnings per share (EPS) of US$1.34 in 2023. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a pretty serious decline to earnings per share numbers as well.

See our latest analysis for LendingClub

It'll come as no surprise then, to learn that the analysts have cut their price target 18% to US$12.71. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on LendingClub, with the most bullish analyst valuing it at US$17.00 and the most bearish at US$9.00 per share. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. Over the past five years, revenues have declined around 3.0% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 20% decline in revenue until the end of 2023. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 9.1% annually. So it's pretty clear that, while it does have declining revenues, the analysts also expect LendingClub to suffer worse than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of LendingClub.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with LendingClub's financials, such as dilutive stock issuance over the past year. Learn more, and discover the 1 other warning sign we've identified, 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 downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.