LendingClub Stock Surges on Post-Earnings Bull Note

The analyst just gave LendingClub an "outperform" rating and a lofty price target

Following last night's unexpected first-quarter profit and revenue beat, Wedbushupgraded LendingClub Corporation (NYSE:LC) to "outperform" from "neutral," and hiked its target price to $5 from $3.75 -- a roughly 55% premium to Tuesday's close. The analyst said the consumer lending firm's tighter operating efficiency in the last three years could put adjusted EBITDA margins near 20% by the end of this year, while revenue could increase 12% to 15%. The stock is up 12.4% at $3.62, at last check.

The stock's reaction to earnings and Wedbush's bull note could spark even more upgrades, with only two "strong buy" ratings and three tepid "holds" on the books prior to today. The consensus 12-month price target of $4.41, meanwhile, is still a solid 29% premium to current levels.

LC shares have been attempting to rally back toward their three-month peak of $3.66 in late February, but had recently run into a ceiling at their 200-day moving average. The security has sliced through this trendline today, though, and is on track for its best day since May 9, 2018, when it jumped 20.6%.

Short sellers have begun to cover, with short interest down 12.7% in the latest reporting period. The 15.83 million shares sold short represents only 3.9% of the stock's available float. However, it would still take over two weeks to buy back these bearish bets, at LC's average pace of trading, which could spark additional tailwinds on the charts, should short interest continue to decline.