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On Friday, JMP Securities adjusted its outlook on Oportun Financial Corp (NASDAQ:), shifting from a “Market Outperform” to a “Market Perform” rating. The firm cited persistent net losses and the company’s underperformance in key areas as primary reasons for the downgrade.
The analyst from JMP Securities pointed out that the previous “Market Outperform” rating was heavily influenced by the stock’s significant discount to book value. However, the relevance of this discount is now in question without a sale or wind-down of Oportun’s loan portfolio. The company presented an approximate $50 million net loss for 2024 before fair value (FV) marks, marking the third year in a row of losses.
Oportun Financial is also projected to face an erosion of about $100 million in book value, as its asset-backed securities (ABS) liabilities are valued below par by this amount. The analyst expressed that without more aggressive downsizing than what has been announced, the path to profitability remains challenging.
The company’s shares are currently considered to be fairly valued at roughly 55% of the forecasted 2024 tangible book value.
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