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Shareholders in LendingClub Corporation (NYSE:LC) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects. The market may be pricing in some blue sky too, with the share price gaining 54% to US$24.40 in the last 7 days. It will be interesting to see if today's upgrade is enough to propel the stock even higher.
After the upgrade, the four analysts covering LendingClub are now predicting revenues of US$721m in 2021. If met, this would reflect a sizeable 31% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 55% to US$0.48. Yet prior to the latest estimates, 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.
It will come as no surprise to learn that the analysts have increased their price target for LendingClub 35% to US$23.20 on the back of these upgrades. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on LendingClub, with the most bullish analyst valuing it at US$28.00 and the most bearish at US$14.00 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.
Of course, another way to look at these forecasts is to place them into context against the industry itself. For example, we noticed that LendingClub's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 71% growth to the end of 2021 on an annualised basis. That is well above its historical decline of 15% a year 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 highlight for us was that the consensus reduced its estimated losses this year, perhaps suggesting LendingClub is moving incrementally towards profitability. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at LendingClub.
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.
This article by Simply Wall St is general in nature. 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.
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