Maxim Group analyst Michael Diana initiated coverage of online business lender On Deck Capital Inc. with a "buy" rating and a 12-month price target of $8.50 per share.

Diana, in a Dec. 20 note, said that On Deck Capital is a leading online business lender, with more than $10 billion in loan originations since 2007. He also said that given its small share of a large market, there are enormous opportunities for the company.

The analyst also praised On Deck Capital for making adjustments in the past two years that resulted in the company successfully targeting higher-quality borrowers, bringing its credit performance more in line with the company and investors' expectations. He also credited CFO Ken Brause, appointed in March, for assisting CEO Noah Breslow in steering the company to a steady course of increasing market share and profitability.

Diana said that On Deck Capital appears to be positioned for meaningful growth based on its predictable credit quality, solid loan growth and stable-to-higher margins.