Leading peer to peer platform Lending Club (LC) received its first analyst coverage today as Sterne Agee initiated coverage with an “Underperform” rating and a price target of $17.75. Â Lending Club closed today at just over $21 / share down over 8% in an off market day.
Lending Club is the first peer to peer lending platform to publicly trade shares in a widely heralded coming of age event for the young company. Â Lending Club was quickly followed by another P2P lender, OnDeck, that listed shares before the end of the year.
Sterne Agee published a pre-IPO report just prior to Lending Club listing on the NYSE. Â At that time Stern Agee indicated they believed the price range to be at $13 to $17. Â This opinion was prior to the pricing which saw Lending Club list at $15 / share.
Stern Agee was quoted at that time;
“Our expectations are that by 2017, LendingClub will be able to generate in excess of $1 billion in revenue while meeting targeted contribution and adjusted EBITDA margins of 50% and 40%, respectively. We are estimating cash-based EPS for 2015, 2016, and 2017 of $0.15, $0.53, and $0.75, respectively. Our estimated valuation for these shares is based on targeted valuation multiples applied to 2017’s expected cash-based EPS and adjusted EBITDA.”
Lending Club has transacted billions in loans with little in earnings. Â Share pricing does not translate to a typical PE as all expectations remain on Lending Club to continue on their dramatic rate of growth. Â Industry followers claim the total addressable market for P2P lenders stands at around $2.7 trillion domestically. Â Lending Club has indicated it is considering international growth.