On Tuesday, Morgan Stanley adjusted its stance on Open Lending (NASDAQ:LPRO), upgrading the stock from Underweight to Equalweight and increasing the price target to $7 from the previous $4. This revision reflects the firm's expectation of stabilizing factors in the auto industry and financial markets that could benefit Open Lending's operations.
The analyst from Morgan Stanley anticipates that growing original equipment manufacturer (OEM) auto inventories will contribute to the stabilization of new vehicle Certified Loan Protection (CERTs) in 2024. There is an expectation of a decline of approximately 27% in 2023, but the projected inventory increase is seen as a positive sign for the following year.
Additionally, the analyst predicts that easing interest rates will provide more flexibility to insurance companies in setting their hurdle rates. This is expected to enhance the attractiveness of program pricing overall, which could be beneficial for Open Lending's business model.
Open Lending specializes in loan analytics, risk-based pricing, risk modeling, and automated decision technology for automotive lenders. The company's platform allows lenders to ensure their loans and offers a unique value proposition in the auto lending space.
The upgrade to Equalweight by Morgan Stanley indicates a neutral view on the stock, suggesting that the firm believes Open Lending's stock is now valued more appropriately relative to its peers. The new price target of $7 represents a significant increase from the previous target, signaling a more optimistic outlook for the company's financial performance.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.