Ally Financial (ALLY) PT Raised to $27 at Piper Sandler After CardWorks Merger Terminated

Piper Sandler analyst Kevin Barker raised the price target on Ally Financial (NYSE: ALLY) to $27.00 (from $25.00) while maintaining an Overweight rating after the CardWorks merger was terminated. The analyst expects a strong positive stock reaction following the termination of the heavy-dilutive transaction.

The analyst stated "We reiterate our Overweight rating and increase our price target to $27 from $25 after ALLY announced the CardWorks merger was terminated. This is clearly a positive development for ALLY given the heavy dilution to TBV (~10%) combined with a very long earn-back period (~8 years) for a company with heavy exposure to subprime consumer credit. We suspected the deal could fall apart given the rapid economic deterioration following the deal announcement, but were assigning a low probability of it actually happening with management adamantly committed to the deal. Therefore, we expect a strong positive stock reaction tomorrow with ALLY no longer committed to a heavily-dilutive transaction.

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