Synchrony Financial (SYF) Maintains Hold Rating Amid Mixed Financial Indicators and Consumer Spending Shifts

Bank of America Securities analyst Mihir Bhatia reiterated a Hold rating on Synchrony Financial (SYF – Research Report) yesterday and set a price target of $44.00.

Mihir Bhatia has given his Hold rating due to a combination of factors including Synchrony Financial’s (SYF) first-quarter earnings and the broader financial landscape. Although SYF’s adjusted earnings per share (EPS) were slightly higher than Bank of America Securities’ estimates, primarily due to lower retailer share arrangements (RSAs), this was partially offset by an increase in interest expenses and reserves. Furthermore, despite a positive outlook for the second half of the year with expected improvements in credit metrics, there remains uncertainty, particularly surrounding the impact of reduced late fees on near-term earnings.

Additionally, Bhatia’s assessment reflects the nuanced nature of the current consumer spending environment and its impact on Synchrony Financial. While loan growth is aligned with expectations, purchase volumes have fallen short, counterbalanced by lower payment rates. The spending patterns indicate a shift towards non-discretionary purchases and a slowdown among non-prime borrowers. Credit trends, however, remain positive, informed by the company’s self-moderation and the expectation of declining reserve rates by the end of the year. These factors, along with adjusted EPS forecasts and a steady price objective, underpin Bhatia’s Hold rating on SYF’s stock.

In another report released yesterday, KBW also maintained a Hold rating on the stock with a $45.00 price target.

SYF’s price has also changed dramatically for the past six months – from $27.370 to $45.020, which is a 64.49% increase.

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Synchrony Financial (SYF) Company Description:

Synchrony Financial engages in the provision of consumer financial services. It operates through three sales platforms: Retail Card, Payment Solutions, and CareCredit. The Retail Card platform is a provider of private label credit cards, and also provides Dual Cards and small-and medium-sized business credit products. The Payment Solutions platform is a provider of promotional financing for major consumer purchases, offering private label credit cards and instalment loans. The CareCredit platform is a provider of promotional financing to consumers for elective healthcare procedures or services, such as dental, veterinary, cosmetic, vision and audiology. The company was founded on September 12, 2003 and is headquartered in Stamford, CT.