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Banking & Finance

Analysts See Positive Trend For PPD, Live Oak Stocks

By Jenny Callison, posted Mar 20, 2020
Both of Wilmington’s public companies have – not surprisingly – seen their stocks tumble in recent weeks.

PPD re-emerged as a public company on Feb. 6 of this year. Its shares sold for $27 and quickly climbed to more than $32, but amid this week’s market turmoil, they dropped to $12. It closed on Friday at $14.52.

Live Oak Bancshares went public in 2015 at $17 per share. Its stock climbed steadily to more than $32 by the summer of 2018 but dropped back by the end of that year to $16. In the past few weeks, it’s fallen further to a close Friday at $9.11.
 
Stock analysts have taken a positive position on futures for the two companies, although some of these targets were set before the recent stock market retreat.
 
For PPD, 14 analysts have issued 12-month price targets. The consensus price target is $33.27, which would represent a 121.6% increase from the current share price. All but one of the analysts have issued “buy” ratings for the stock; the dissenter recommends “hold.”

Analysts also note that PPD is trading at a higher price-to-earnings ratio than are its peers, indicating that PPD is currently more expensive than other companies in its industry. Its gross revenues of $4.03 billion compare favorably with $1.24 billion, the average gross revenues of its competitors.

As of Friday, Live Oak had “buy” recommendations from the two analysts who weighed in. The consensus 12-month price target from these analysts is $16 per share, a roughly 79% increase from its current stock price.

“All stocks have been hit hard” by the Covid-19 virus developments, but banks have been especially hard hit, Aaron Deer, managing director at Piper Sandler, who follows Live Oak Bancshares, said Thursday. Nevertheless, his firm has issued an “overweight” rating for LOB, which amounts to a cautious recommendation that investors consider purchasing the stock.

Deer regards Live Oak Bank as “one of the most interesting” in the industry, partly because of what the bank is doing with regard to technology.

“They are doing some really unique things,” he said.

He pointed out that the bank is the largest (by value of loans) SBA lender in the country. Because SBA loans to small businesses will likely be a key part of the federal government’s approach to repairing the economy as the Covid-19 epidemic passes, Deer believes that Live Oak will be very involved in that effort.
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