Oportun Financial drops after revising FY22 earnings forecast, analysts lower price target
Oportun Financial (OPRT) is trading down around 28% after beating second-quarter earnings, due to lower FY22 earnings expectations, reflecting a weakened macro backdrop.
Q2 non-GAAP EPS of $0.11 (vs. $0.56 Y/Y) beat $0.02, while revenue of $226M (+63.4% Y/Y) beats $11.4 million.
Revenue increased primarily due to higher interest income due to growth in the company’s underlying portfolio due to increased origination volume.
Q2 Adjusted EBITDA was -$4.5m, compared to $4.5m in the prior year quarter.
For FY22, revenue guidance is between $930 million and $940 million (vs. consensus of $923.27 million). EPS forecast ranges between $1.19 and $1.34 (vs. consensus of $2.49)
The initial revenue estimate was between $875 million and $900 million, and the EPS estimate was between $2.32 and $2.46.
“Since the end of the quarter, however, we have observed that the weakening macroeconomic environment, including rising inflation and rising gas prices, has begun to impact our numbers more significantly than before. “said CEO Raul Vazquez.
The company has seen an increase in delinquencies since the end of the second quarter, especially among borrowers with lower free cash flow and those with smaller loans with shorter maturities, according to Vazquez.
“As the macroeconomic environment has weakened, we have taken prudent steps to tighten our credit exposure and reduce our spending growth,” the CEO said.
The core personal loan product is seeing the least amount of tightening, while credit card receivables and secured personal loan receivables targets are seeing significant tightening, Vazquez told analysts.
“Although we expect to have high loss rates for the third and fourth quarters of this year, our current projection is that losses will begin to decline in the first quarter of 2023 and return to our target of 7% to 9% d a year from now,” Chief Financial Officer Jonathan Coblentz said.
BTIG analyst Mark Palmer lowered the company’s price target to $21 from $27, retaining a buy rating on the stock. Palmer said he continues to believe in Oportun Financial’s long-term growth and profitability prospects, particularly given the ultimate impact of its national rollout and the contributions of its Digit digital banking app.
Barclays analyst Mark DeVries also lowered the price target on the OPRT to $12 from $15.