On Monday, Stephens, a financial services firm, increased its price target for LendingTree (NASDAQ: TREE) to $65 from $55, maintaining an Overweight rating on the stock. The revision follows LendingTree's recent performance, which marks a significant shift after a series of revenue misses in previous quarters.
LendingTree, an online lending exchange, broke its streak of ten consecutive quarterly revenue misses with a substantial revenue beat in the last quarter, suggesting a potential ''growth turnaround''. The company reported a revenue beat of approximately 12% for the second quarter of 2024, indicating a positive shift in its financial trajectory.
According to Stephens, despite facing macroeconomic headwinds across nearly all product verticals over the past two years, LendingTree's Insurance business has shown exceptional growth, increasing by triple digits year-over-year. This growth is expected to continue, providing ample opportunities for further expansion.
Stephens highlighted that while LendingTree has experienced pressure in its market, the company is poised to see most of its products return as growth engines soon. This is due in part to the low comparative base from previous quarters and the potential for rate relief, which is not currently factored into the company's guidance.
The firm emphasized LendingTree's strategic focus on profit dollar growth over profit margin, a principle that is expected to guide the company's operations in the coming quarters. The new price target of $65 is based on a forward EBITDA multiple of 10 times, reflecting the analyst's confidence in LendingTree's return to its foundational operational focus.
In other recent news, LendingTree has demonstrated robust growth, particularly in its insurance sector, which saw revenues more than double compared to the same quarter the previous year. The company expects this positive trend to persist into the third quarter.
An analysis by Needham, maintaining a Buy rating on LendingTree, suggests that potential interest rate reductions by the Federal Reserve could further benefit LendingTree's various non-insurance verticals, including mortgage and personal loans.
On the executive front, LendingTree has welcomed Jason Bengel as the new CFO, succeeding Trent Ziegler. Despite a recent data breach at its subsidiary QuoteWizard, LendingTree reassures stakeholders of minimal impact on its operations.
These are all recent developments, with LendingTree forecasting continued revenue growth into the third quarter of 2024. The company aims to increase market share in both lending and insurance sectors and plans to leverage marketplaces to enhance business growth. Analysts from Needham remain positive about LendingTree's future, expecting the stock to open at an enterprise value to EBITDA multiple of approximately 9.5 times the firm's fiscal year 2025 estimate.
InvestingPro Insights
As LendingTree (NASDAQ: TREE) demonstrates a potential growth turnaround, investors and analysts are closely monitoring the company's financial health and stock performance. According to real-time data from InvestingPro, LendingTree has a market cap of $736.87 million, and despite a challenging revenue growth rate of -18.89% over the last twelve months as of Q2 2024, the company has shown a remarkable gross profit margin of 95.11%. These figures may provide some context to the company's recent revenue beat and Stephens' increased price target.
InvestingPro Tips indicate that LendingTree has a high shareholder yield and is expected to see net income growth this year. However, it's worth noting that three analysts have revised their earnings expectations downwards for the upcoming period, suggesting that investors should remain cautious. The stock's price volatility is also highlighted, with notable fluctuations over the last year, including a significant 129.77% return. Nonetheless, LendingTree's liquid assets exceed its short-term obligations, offering some financial stability.
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