On Wednesday, Lending Tree shares received a boost as Keefe, Bruyette & Woods shifted its perspective on the company, upgrading the stock from Market Perform to Outperform and setting a new price target of $45.00. This new target suggests a notable 38% potential upside from its current valuation.
The optimism from the firm is based on several key factors. First, there is an anticipated earnings recovery in 2024, driven by a significant rebound in Lending Tree's insurance segment. The analysts believe that the company's guidance for the year may be on the conservative side.
Moreover, there is a growing confidence in Lending Tree's ability to effectively manage its convertible note maturity in the first half of 2024.
Despite the positive outlook, the analysts acknowledge that macroeconomic conditions and the execution of the convertible note strategy present a range of possible outcomes for the company's valuation. Nevertheless, the firm's assessment is that the potential rewards outweigh the risks at this point.
Looking further ahead, while there are areas that Lending Tree needs to address, such as regaining market share in the consumer segment and improving its purchase mortgage offerings, these concerns are expected to be less of a focus for investors in the short term. The primary attention is likely to be on the company's broader earnings recovery and the optimization of its balance sheet.
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