LDI - loanDepot falls over 10% as margin pressure drags earnings William Blair turns neutral

2023-03-09 11:38:21 ET

loanDepot ( NYSE: LDI ) stock slid as much as 10.6% on Thursday, before paring losses to trade 3.7% lower, after the mortgage lender posted weaker-than-expected results , hurt by margin pressure, while its outlook for origination volume was below expectations.

William Blair downgraded loanDepot ( LDI ) to Market Perform from Outperform as interest rates are likely to stay higher for longer, and industry overcapacity is reducing slower than expected.

"Origination volumes came in better than expectations but gain-on-sale margins have been slower to recover than anticipated," said analyst Robert Napoli.

Adj. EPS estimate for 2023 was reduced to -$0.67 from -$0.22. Revenue estimates for 2023/2024 were cut to $875.4M/$1.39B (prior $1.04B/$1.48B).

"Given macro changes since Q3, we push out our expectations for LDI to return to profitability to Q2 2024," said Jefferies analyst Kyle Joseph, maintaining his Buy rating.

Jefferies cut its 2023 EPS estimate for loanDepot ( LDI ) to -$0.64 from -$0.24. 2024 EPS estimate was revised to $0.12 from $0.29. It reduced its PT to $2.50 as liquidity remains strong but book value declined in Q4 (32.3% potential upside to last close).

Wall Street analysts on average rate the stock Hold , in line with SA Quant's rating .

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