UPDATE: Compass Point Initiates Coverage On On Deck Capital On Unfavorable Risk/Reward

In a report published Wednesday, Compass Point analyst Michael Tarkan initiated coverage on On Deck Capital, Inc. (NYSE: ONDK) with a Sell rating and $14.00 price target.

In the report, Compass Point noted, "We are initiating coverage of On Deck Capital (ONDK) with a Sell Rating and $14 price target. Our 2015, 2016, and 2017 adjusted EPS estimates are ($0.15), $0.20, and $0.40, respectively, versus consensus of ($0.17), $0.46, and $0.46. OnDeck is a leading online lending platform for small businesses and has facilitated more than $2 billion of loans inception-to-date. While we see value in the company's niche in serving the inefficient small business lending sector, and the total addressable market is undeniably significant, we believe the current valuation does not account for the inherent risks in the business surrounding an untested credit model, increasing competition, uncertainty in a rising interest rate environment, and an evolving regulatory landscape. These risks may not significantly impact the company's near-term trajectory, but we believe they will ultimately drive slower growth and higher expenses. With shares trading at 106x 2016 EPS and 4x revenue, we view current risk/reward as unfavorable."

On Deck Capital closed on Tuesday at $21.25.