Wells Fargo has adjusted its price target for Synchrony Financial (NYSE: NYSE:SYF), raising it to $60.00 from the previous $53.00. Despite this change, the firm maintained its Equal Weight rating on the stock.
The adjustment comes amidst a backdrop where year-over-year delinquency pressure is reportedly easing for Synchrony Financial and the broader card industry.
The analyst at Wells Fargo noted a positive near-term outlook for the company's shares, citing a delay in the Consumer Financial Protection Bureau's (CFPB) late fee rule due to ongoing court proceedings. This delay is expected to extend past the upcoming November elections.
The firm's analyst elaborated on the decision, stating that the shares of Synchrony Financial have a positive near-term bias. This sentiment is influenced by the current legal entanglements that are postponing updates to the CFPB's late fee rule, which could have otherwise impacted the company's operations.
In other recent news, Synchrony Financial reported net earnings of $789 million, or $1.94 per diluted share, in its third quarter 2024 earnings call. The company also revised its full-year 2024 EPS guidance upwards to a range of $8.45-$8.55, surpassing both JPMorgan's and the consensus estimates. This positive earnings report led JPMorgan to raise its target for Synchrony Financial to $59 from $53, maintaining a neutral rating on the stock.
Despite facing challenges in consumer spending and credit performance, Synchrony managed to add 4.7 million new accounts and generate $45 billion in purchase volume. However, the company anticipates a low single-digit decline in purchase volume for Q4. The firm's provision for credit losses rose to $1.6 billion due to higher net charge-offs, and it projects fully diluted earnings per share between $8.45 and $8.55 for the full year 2024.
Synchrony Financial is also navigating uncertainties related to the Consumer Financial Protection Bureau (CFPB) late fee rule litigation. Although the management expects the rule to be eventually implemented, the timing remains uncertain.
InvestingPro Insights
The recent price target adjustment by Wells Fargo aligns with several key metrics and trends highlighted by InvestingPro. Synchrony Financial's stock has shown remarkable strength, with a 90.28% price total return over the past year and a significant 44.03% return in the last six months. This performance is reflected in the stock trading near its 52-week high, at 99.88% of that level.
InvestingPro Tips suggest that SYF is trading at a low P/E ratio relative to its near-term earnings growth, which is consistent with Wells Fargo's valuation approach. The current P/E ratio of 7.9 and the adjusted P/E ratio of 6.97 for the last twelve months as of Q2 2024 indicate that the stock may still have room for growth despite its recent strong performance.
Additionally, Synchrony Financial has maintained dividend payments for 9 consecutive years, with a current dividend yield of 1.77%. This consistency in shareholder returns, coupled with a 14.02% revenue growth in the last twelve months, supports the positive outlook for the company.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Synchrony Financial, providing a deeper understanding of the company's financial health and market position.
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