On Thursday, Baird made a positive adjustment to its outlook on Synchrony Financial (NYSE:SYF) shares, raising the price target to $60.00 from the previous target of $56.00. The firm maintained its Outperform rating on the stock.
The adjustment follows Synchrony Financial's recent earnings report, which revealed an earnings per share (EPS) of $1.55, surpassing consensus expectations. This beat was attributed to better than anticipated core pre-provision net revenue (PPNR), which benefited from solid expense management and lower reserve savings allowances (RSAs), mainly due to higher net charge-offs (NCOs).
Synchrony Financial's credit trends displayed a mixed picture, with NCOs outperforming expectations, while the allowance for credit losses (ACL) was reported to be slightly higher.
However, delinquency trends suggest an improvement in credit metrics, leading to the possibility that the company may have moved past the peak of its NCOs. The revised guidance provided by Synchrony Financial was generally positive, even though it indicated softer purchase volume trends.
The firm's analyst noted the EPS outlook for Synchrony Financial is slightly better and that the credit is trending as expected. Despite the recent uptick in the company's stock price, the firm continues to recommend Synchrony Financial as a good buying opportunity.
The commentary reflects the analyst's view that the financial services company is well-positioned following its latest financial results and the provided guidance, suggesting confidence in the company's performance moving forward.
In other recent news, Synchrony Financial has reported a nearly 12% increase in Q2 net profit, primarily due to a rise in interest income from loans, and a reported EPS of $1.55, surpassing consensus forecasts.
Also, the company has expanded its partnership portfolio by adding or renewing agreements with 15 partners, including Virgin Red and Verizon (NYSE:VZ). Synchrony Financial has also announced the appointment of Amy Tiliakos as the new Senior Vice President, Chief Accounting Officer, and Controller.
RBC Capital, Jefferies, and JPMorgan have all adjusted their price targets for Synchrony Financial, with RBC lifting it to $55, Jefferies to $60, and JPMorgan to $53.
Despite potential regulatory challenges, including the Consumer Financial Protection Bureau's final rule on the reduction of late fees, the company remains confident in its ability to offset any adverse effects.
These are recent developments for Synchrony Financial, which is navigating through potential regulatory challenges. Analysts from various firms including Jefferies, BofA Securities, Goldman Sachs, BTIG, and Keefe, Bruyette & Woods have maintained their respective ratings and projections for the company.
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