Tuesday, Jefferies maintained a Buy rating on Synchrony Financial (NYSE:SYF) stock and increased the shares target to $55.00 from the previous $50.00. The firm's second-quarter earnings per share (EPS) estimate for Synchrony Financial is set at $1.29, which is slightly below the consensus of $1.35. This estimate takes into account the company's recent guidance on the impact of late fees.
The forecast by Jefferies for Synchrony Financial's net interest income is $4.4 billion for the quarter, aligning with the 10-15 basis points (bps) lower net interest margin (NIM) guidance provided at recent conferences. Additionally, the return on savings account (RSA) expense is projected to be $860 million, and the provision for loan losses is estimated at $1.728 billion.
Jefferies' outlook includes a total operating expense (OPEX) forecast of $1.230 billion, which is consistent with other street estimates. The total loan portfolio is anticipated to be $103.7 billion, considering the recent master trust data from May.
Net charge-offs (NCOs) are expected to be $1.638 billion, in line with consensus estimates, and delinquencies (DQs) are projected at $2.371 billion, also matching the guidance provided.
The second quarter of 2024 is expected to mark the peak of the NCO cycle for Synchrony Financial, as delinquencies have already reached their high point in the first quarter of 2024, assuming the macroeconomic environment remains stable.
In other recent news, Synchrony Financial has announced significant changes in its executive team and compensation plan. The company has appointed Amy Tiliakos as the new Senior Vice President, Chief Accounting Officer, and Controller, succeeding the retiring David P. Melito. The company has also approved a new long-term incentive plan for its executives, aiming to align their interests with the company's growth and performance.
Synchrony Financial's recent strategic acquisitions and robust first-quarter results have been noteworthy. The company's acquisition of Ally Lending's point-of-sale financing portfolio and the sale of its Pets Best insurance business have been pivotal in these developments.
Analysts have also provided their assessments of the company. BofA Securities and Goldman Sachs have maintained their Neutral and Buy ratings respectively, citing the company's consistent performance and market expectations.
BTIG initiated coverage with a Buy rating, emphasizing the company's recent successes and a favorable macro environment. Keefe, Bruyette & Woods upgraded the company's rating to Outperform, indicating a positive outlook on the company's future. These are the recent developments for Synchrony Financial.
InvestingPro Insights
As Jefferies maintains an optimistic view on Synchrony Financial (NYSE:SYF), real-time data from InvestingPro reinforces this perspective. The company is currently trading at a low P/E ratio of 6.83, suggesting that the stock may be undervalued relative to its near-term earnings growth potential. Furthermore, Synchrony's stock has experienced a significant price uptick of 25.32% over the last six months, indicating a robust upward trend.
InvestingPro Tips highlight that Synchrony Financial has maintained dividend payments for 9 consecutive years, which, along with a dividend yield of 2.1%, could appeal to income-focused investors. Additionally, the company's revenue growth over the last twelve months has been 9.21%, reflecting a healthy financial trajectory.
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