Sandler O'Neill & Partners analyst Christopher Donat downgraded GreenSky Inc.'s stock rating to "hold" from "buy" as he awaits clarity on both future funding relationships and the company's strategic review.
GreenSky Chairman and CEO David Zalik said the board and senior management started the review and retained FTP Securities LLC and J.P. Morgan Securities LLC as financial advisers and Cravath Swaine & Moore LLP and Troutman Sanders LLP as legal advisers.
The company also suspended its earnings guidance.
Donat said he has "less confidence" in his earnings estimates without management guidance. He lowered his EPS estimates for the company to 65 cents from 72 cents for 2019 and to 72 cents from 90 cents for 2020. He introduced a 2021 estimate of 82 cents.
The analyst reduced his price target for the company to $7 from $14, which is based on 10x his new 2020 EPS estimate.
He also noted that GreenSky's second-quarter EPS of 19 cents was 5 cents lower than his estimate.