Guggenheim Securities analyst Jeff Cantwell has downgraded LendingClub Corp. to "neutral" as he sees more intense competition as a significant headwind to the company's future growth and profitability.
The entry of certain balance-sheet lenders into the consumer lending space will be troublesome for the company, he wrote. This environment will lead to weaker loan originations growth and an ongoing decline in LendingClub's take rate, Cantwell said. It may also force the company to spend more on marketing, he added.
Cantwell also noted that management's updated outlook highlighted that legal expense will be an overhang on GAAP net income.
The analyst maintained his price target of $4. He changed his EPS prediction for 2018 to 6 cents from 7 cents and lowered his projection for 2019 to 20 cents from 19 cents.