LendingClub on Monday posted its second highest quarterly revenues in its history. And Wall Street has responded.
Net revenue spiked 35% to $139.6 million in the second quarter, beating Wall Street’s average estimate of $136.4 million, according to Thomson Reuters.
Loan originations were up 10%.
Shares of the online lending company are up over 8% on Tuesday, at $5.91 a piece. Still, a far cry from the initial public offering price of $24 per share.
Credit Suisse sent out a note to clients Tuesday morning outlining its case for a 30% boost in the LendingClub’s stock price.
“This is the first quarter in almost a year in which LendingClub has reported [year-over-year] growth in loan originations – and we anticipate ongoing acceleration throughout the next four quarters as the company continues to recover,” the bank said.
LendingClub saw an exodus of investors and a fall in revenue after a fraud scandal and the resignation of its chief executive, Renaud Laplanche, in May 2016.
But a number of tailwinds underpinning the lending space appear to be translating into better results for LendingClub.
According to a Federal Reserve study called, “Fintech Lending: Financial Inclusion, Risk Pricing, and Alternative Information,” traditional lenders are pulling back and that’s helping firms like LendingClub.
“Based on analysis of LendingClub data that the researchers requested, they concluded that fintech is addressing the credit gap and broadening financial services to underserved borrowers,” LendingClub said in a statement emailed to Business Insider.
The firm said its machine learning capabilities and access to data allow it to say yes to more loans without increasing investor risk.
Credit Suisse has a neutral stance on the stock, but a price target of $8 per share, 30% higher than its current market price.
Goldman Sachs is less certain about LendingClub’s future.
In a note sent out to clients Tuesday morning, the bank emphasized its neutral stance on the stock.
“Despite reacceleration in originations growth and indications of strengths in investor and borrower demand, we believe the risk/reward remains balanced,” the bank said. Goldman maintained its price target of $6 a share.