Jefferies Reiterates Buy on Santander Consumer USA (SC) Following Portfolio Analysis
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Jefferies reiterated a Buy rating and $15.00 price target on Santander Consumer USA Holdings Inc. (NYSE: SC) following an analysis of the company's loan portfolio. Through the study, Jefferies believes that it is possible NCO rates may stabilize or ease into CY17. A 10bps reduction in NCOs results in a 10% increase in EPS due to lower NCOs and lower ALLL requirements.
Analyst John Hecht commented, "In this note, we pose that credit headwinds in CY15 have begun to abate. In our analysis, we point out that even stabilizing credit may benefit SC earnings and the stock valuation, given improved earnings visibility and the lack of further ALLL building. Given the stock appears to be pricing in distressed results, the combination of an attractive valuation along with emerging (potential) credit improvements leave us constructive on the name."
Shares of Santander Consumer USA Holdings Inc. closed at $12.14 yesterday.
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