David Scharf, an analyst from JMP Securities, has initiated a new Hold rating on Open Lending (LPRO).
David Scharf’s rating is based on several uncertainties surrounding Open Lending’s current situation. The company recently experienced a significant reversal in previously booked profit share revenue, which was larger than any prior adjustments, and is undergoing major leadership changes, including the search for a permanent CFO. Although Open Lending’s Lender Protection Program remains valuable, there are unresolved issues such as the need to revamp its underwriting and pricing models, with no clear timeline for returning to historical profit-share revenue levels.
Additionally, the new management has yet to provide guidance on potential changes to the expense structure, and there are concerns about the impact of excluding credit-builder and thin-file borrowers on the addressable market. The auto industry’s elevated risks from proposed tariffs further complicate the outlook. Despite maintaining a net cash position, the company’s equity and enterprise values have significantly eroded, and the shares are trading at multiples that suggest fair valuation given the high level of uncertainty. These factors collectively support Scharf’s Hold rating.