Shares of online lending marketplace LendingTree Inc (US:TREE) rose 17.6% higher in trading over Thursday and Friday after the market was informed of CEO Doug Lebda's latest stock purchases revealed in a form 4.
The transactions were initially spotted on Fintel’s latest CEO purchases page, later on, Wednesday evening.
The latest spark of investor confidence has boosted LendingTree’s share price gain to 114% since hitting a 52 week low point of $17.60 on the 27th of December. Even with the most recent share price strength, the TREE continues to trade -68.5% lower on a 1 year view.
Lebda has likely been encouraged by the share price momentum which has gathered steam throughout January and showing signs of returning investor confidence.
The filing disclosed a purchase of 65,062 shares by Doug Lebda which occurred in two transactions on Monday. The trades had an average purchase price of $32.03 per share with a total transaction value of $2,084,204.
The latest transaction has driven Lebda’s total share count to 1,877,296 which equates to around 14.7% ownership of the total float.
Fintel’s insider sentiment quant score of 80.11 is bullish on TREE shares as it ranks the company in the top 3.6% of 14,767 globally screened companies. Insiders have bought a total of 0.197% of the float in the last 90 days.
While the share price continues to strengthen, sentiment in the options market remains bearish, explained by a Fintel put/call ratio of
Some investors remain worried about the recent price rise, which has been explained by a spike in the ratio from a bullish figure of around 0.5 around mid-December to above 2, which tells us put option demand is almost 4x call option demand.
The chart to the right shows how this ratio of option demand has behaved over the last year with significant share price movements.
Fintel reported that more than $50 million in net premium was sold over Thursday and Friday following the sharp price rise as holders took bets against the rally. This is shown in the table below.
Options sentiment has remained bearish as investors remain concerned about the performance of the Home loan segment as deteriorating macroeconomic conditions have driven mortgage applications lower.
Although the sentiment is weak, LendingTree management believes it can weather medium-term headwinds with more than $286 million in cash on the balance sheet reported at the most recent third quarter result.
During the result, management refined its guidance and told investors that it intends to report adjusted EBITDA of $77 to $82 million for the full year from sales of $985 million to $1 billion.
LendTree’s variable marketing margins are expected to come in the range of $330 to $340 million.
For 2023, TREE’s management reiterated to the market that they expect to generate $15 to $20 million as a quarterly adjusted EBITDA floor for the year and said that the
Susquehanna Financial Group analyst James Friedman kept his ‘positive’ rating on the stock after the third quarter result but shifted his target price from $59 to $46.
Friedman continues to see LendingTree as a solid operator and thinks the margin expansion story is underappreciated in the share price. The analyst pointed out how the company has been able to grow its Home segment revenues by 4% whilst volumes fell by -29% over the year.
Fintel’s average consensus forecast price of $42.39 suggests the stock could still see a further 10.61% upside from current levels over 2023.
Fintel’s revenue and EBITDA forward analyst forecasts indicate that analysts expect TREE’s earnings will bottom out in FY23 before returning to a period of growth from 2024 onwards.
This has been shown in the table below:
LendingTree will next update investors with the release of Q4 and FY results around the 23rd of February.
This story originally appeared on Fintel.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
