LPRO Stock Forecast & Price Target

Open Lending Corp demonstrated a positive financial trajectory in the third quarter, with total revenue increasing by 3% year-over-year to $24.2 million, surpassing internal forecasts and consensus estimates by significant margins. The company also reported a robust 22% year-over-year growth in Adjusted EBITDA, reaching $5.6 million, aided by a $1.1 million positive adjustment to previously recognized profit-sharing fee revenue. Furthermore, the ongoing expansion of the Lenders Protection Program, particularly the recent agreement with a third automotive manufacturer, positions Open Lending strongly to capture additional market share among near-prime and non-prime borrowers, enhancing its revenue potential and mitigating lending risks.

Open Lending Corp experienced a significant decline in its total number of certified loans, which fell 13% year-over-year to 23.9K and included a concerning 57% drop in relationships with captive lenders from three auto manufacturers. The company's management anticipates further challenges, projecting total certified loans to decrease by 10%-18% year-over-year in the fourth quarter, exacerbated by ongoing headwinds in lending to near-prime borrowers and seasonal effects. Additionally, an increase in auto loan delinquencies and defaults has prompted a downward revision of profit-sharing fee revenue, alongside the prevailing risks associated with declining consumer confidence and spending impacting Open Lending's revenue and earnings prospects.