Wells Fargo cuts SLM Corp. (SLM) as credit issues persist
- Wall Street ends volatile week higher as Fed officials ease bank fears
- Deutsche Bank shares plunge after spike in credit default swaps
- 6-week inflows to bonds? Biggest ever; 7-day inflows to cash? $142.9 billion; Policy panic now 'inevitable' - BofA's Hartnett
- World stocks gyrate as bank contagion fears bite
- Activision (ATVI) gains 5% as UK's CMA narrows concerns scope in Microsoft (MSFT) deal
Get Alerts SLM Hot Sheet
10 Buy, 7 Hold, 1 Sell
Rating Trend: Down
Today's Overall Ratings:
Up: 9 | Down: 10 | New: 12
Join SI Premium – FREE
Get instant alerts when news breaks on your stocks. Claim your 1-week free trial to StreetInsider Premium here.
Wells Fargo downgraded SLM Corporation (SLM) to an Equal Weight rating (From Overweight) and cut the price target on the stock to $16.00 (From $19.00) as the consumer banking company continues to experience credit issues.
Analyst Michael Kaye believes that persistent credit issues have damaged management's credibility. He does not see any visible catalysts to move the shares higher, and thinks it will take time to regain investor confidence.
Kaye wrote in a note, “SLM reported an unexpected Q4 EPS loss of -$0.33, which was driven by a much higher provision expense. The provision expense was partly due to worsening credit expectations from forbearance policy changes & staffing/operational issues. These issues are expected to persist in 2023 and to a lesser extent, 2024. This is concerning as management had previously stated these items were largely behind the company.”
During the Q3 earnings call on 10/27, management guided that Q4 delinquency would improve to the low 3% range and that the NCO would improve with the full year at 2.3%. Despite what should have been good visibility on Q4 trends, Q4 delinquency worsened +3bps to 3.77%. And the Q4 NCO rate was sharply higher with the full year at 2.55% vs. their 2.3% estimate. On the Q4 conference call they also cited newer pockets of weakness including those borrowers earlier in the repay cycle with larger debt payments.
Wells Fargo reduced 2023 EPS and 2024 EPS estimates by $0.05 each to $2.50 and $2.70. 2023 EPS estimates are at the low-end of guidance. The lower EPS is due to higher expected credit losses, partially off-set by better NIM & loan balances.
Shares of SLM are up 2.87% in mid-day trading on Friday.
By Michael Elkins | [email protected]
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Maoyan Entertainment (1896:HK) PT Raised to HK$13.50 at Jefferies
- Angelalign Technology Inc (6699:HK) PT Lowered to HK$123 at Goldman Sachs
- Kering SA (KER:FP) (PPRUY) PT Raised to EUR655 at Jefferies
Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS Change, Analyst PT Change, Hot List
Related EntitiesEarnings, Wells Fargo, Michael Elkins
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!