Open Lending’s Financial Uncertainty and Leadership Transition Prompt Hold Rating

BTIG analyst Vincent Caintic has maintained their neutral stance on LPRO stock, giving a Hold rating on March 19.

Vincent Caintic has given his Hold rating due to a combination of factors impacting Open Lending’s financial outlook. The company’s recent earnings report revealed a significant profit share write-down, primarily driven by make-whole agreements resulting from poor credit performance of loans from 2021 and 2022. This situation raises concerns about future profit share collections and potential liabilities, as Open Lending must first address these make-whole provisions with its insurance carriers.
Additionally, the appointment of a new CEO, Jessica Buss, brings some optimism due to her extensive experience in the insurance sector. However, investors are likely to seek clarity on her strategy to restore value to the company’s shares and address structural concerns. The lack of guidance and the tripping of debt covenants further contribute to the uncertainty surrounding Open Lending’s near-term profitability, prompting a cautious approach with a Hold rating.

In another report released on March 19, Jefferies also downgraded the stock to a Hold with a $3.70 price target.