SC - Ally Financial Santander Consumer USA reinstated with Buy ratings at BofA

BofA Securities Analyst Brandon Berman reinstates coverage of the auto finance sector with a Buy rating on Ally Financial (ALLY) and Santander Consumer USA (SC).For the sector, Berman sees near term supply constraints for new vehicles continuing to support used-car demand and prices. Furthermore, funding costs should remain low even as long-end bond yields continue to rise, since auto loan funding costs are tied to the short end of the curve.Ally's established relationships with dealers provides a key competitive advantage, and access to retail deposit enhance its funding cost advantage, Berman says.Sets ALLY price target at $64.ALLY stock edges up 0.2% in premarket trading.As for Santander: "We believe the current discounted valuation vs. other pure-play subprime auto finance companies — likely due to overblown credit quality concerns — offers investors an attractive entry point given SC’s scale and funding advantages."SC price target at $36.See ALLY and SC's price/GAAP earnings (trailing twelve

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Ally Financial, Santander Consumer USA reinstated with Buy ratings at BofA