Morgan Stanley Upgrades Navient Corporation (NAVI) to Equalweight
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Morgan Stanley analyst Jeffrey Adelson upgraded Navient Corporation (NASDAQ: NAVI) from Underweight to Equalweight with a price target of $16.00 (from $14.00).
The analyst comments "We are separating out our Consumer Finance coverage from our Large Cap Bank coverage. Our view on Consumer Finance is now Cautious. While stock PEs look cheap relative to history, there is significant risk to 2023 EPS, in particular from higher reserve builds. As times get tougher, consumers increasingly will have to prioritize who to pay. Repaying consumer lenders comes after paying for food, shelter, and energy. With 22% of loans out to the bottom 40% of income earners, we expect consumer loan delinquencies and net charge-offs will accelerate over the next several quarters. It is too early to go overweight, as we see a higher probability of downside risk to 2023 and 2024 EPS than upside. Three key reasons: high inflation, rising unemployment, and declining excess savings."
Shares of Navient Corporation closed at $16.57 yesterday.
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