Analyst Explains Why They Upgraded Their Rating on OneMain Holdings Inc (OMF)

By Carrie Williams

Northland Securities analyst Michael Grondahl upgraded OneMain Holdings Inc (OMFResearch Report) to Buy today and set a price target of $40. The company’s shares closed yesterday at $31.63.

Grondahl wrote:

“We believe a couple catalysts exist for OMF. Credit has been trending better. Based on recent trust data from an unsecured trust closed in September 2017, net charge-offs have been relatively flat and declined in a point on the curve where previous OMF vintages had NCOs still climbing. We believe OMF overall is running slightly better than its net charge-off guidance of <6.5% for 2019. We believe 2Q19 earnings could see a slight beat. With a combination of conservative underwriting and secured lending now totaling 49% of the book, OMF is beginning to see some benefits. In addition, with unemployment trends and slightly better wages, this better credit trend could continue for the rest of 2019 and into 2020. We note 10 bps of net charge-offs higher or lower equals ~$0.10 +/- impact to EPS as OMF remains leveraged to credit trends."

According to TipRanks.com, Grondahl is a 5-star analyst with an average return of 18.1% and a 53.9% success rate. Grondahl covers the Financial sector, focusing on stocks such as Front Yard Residential Corporation, Altisource Portfolio Solutions SA, and Thunder Bridge Acquisition Ltd.

The word on The Street in general, suggests a Moderate Buy analyst consensus rating for OneMain Holdings Inc with a $39.33 average price target.

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The company has a one-year high of $37.29 and a one-year low of $22.47. Currently, OneMain Holdings Inc has an average volume of 435.2K.

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OneMain Holdings, Inc. is a consumer finance company, which provides origination, underwriting and servicing of personal loans, primarily to non-prime customers. It operates through the following two segments: Consumer & Insurance and Acquisitions & Servicing, The Consumer & Insurance segment is comprised of service secured and unsecured personal loans and voluntary credit and non-credit insurance and related products through its combined branch network, digital platform, and centralized operations. The Acquisition & Services segment engages in providing services SpringCastle portfolio which was acquired through joint venture. The company was founded on August 5, 2013 and is headquartered in Evansville, IN.