LPRO Stock Forecast & Price Target

Open Lending Corp exhibited a positive performance in the third quarter, reporting a 3% year-over-year increase in total revenue to $24.2 million, which surpassed forecasts by $2.3 million and consensus estimates by 9%. The company's adjusted EBITDA also reflected strong growth, rising 22% year-over-year to $5.6 million, bolstered by a $1.1 million positive adjustment in profit-sharing fee revenue, contrasting with a previous year reversal of $7.0 million. Additionally, the expansion of the Lenders Protection Program, aimed at offering favorable loan terms to borrowers with near-prime and non-prime credit ratings, positions Open Lending well for future growth by enhancing loan accessibility while mitigating risks for lenders.

Open Lending Corp has experienced a substantial decline in certified loans, with a 13% year-over-year reduction to 23.9K, signaling challenges in maintaining loan volume amid stricter underwriting practices and rising prices, especially within its relationships with captive lenders. Additionally, management forecasts further declines for the fourth quarter, projecting total certified loans to decrease by 10% to 18% year-over-year, which falls below prior expectations. These factors, combined with increasing auto loan delinquencies and a decrease in consumer confidence, pose significant risks to Open Lending's revenue and overall financial performance.