BTIG Affirms Synchrony Financial (SYF) at 'Buy' Ahead of Q3 Report; Says Credit Deterioration Fears Remain in Focus
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BTIG affirms Synchrony Financial (NYSE: SYF) at Buy with a price target of $42 ahead of the company's Q316 report.
Analyst Mark Palmer commented today:
If investors who heard Synchrony Financial’s (SYF) management team outline the company’s merits during its mid-2014 IPO roadshow had been able to flash forward a couple of years to see how SYF had executed its plan, they almost certainly would have been impressed by the extent to which it is outpacing the rest of the private label credit card (PLCC) industry in both loan receivables growth and online and mobile purchase volumes. They also would have been encouraged by SYF having grown deposits to the point that they represent 71% of its funding, as well as the capital return program the company initiated during 3Q16.
However, those investors likely would be dismayed to find that even with all of the positives SYF has accrued during the past two years, the enthusiasm for the company’s growth story that drove its stock to almost $36 in July 2015 has not been enough to offset the impact of fears about credit deterioration. Such concerns were stoked on June 14 when SYF disclosed that it expected its net charge-offs (NCOs) to increase by 20-30bps during the following 12 months, causing the stock to plunge by more than 13% that day.
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