2023-04-05 10:24:37 ET
- SLM Corp. ( NASDAQ: SLM ) shares perked up 3.5% in Wednesday morning trading after Morgan Stanley double upgraded the student loan-related stock to Overweight from Underweight, arguing it's "mispriced for recent improvement in credit."
- The stock was off 25% since the start of 2023 and 29.1% from a year ago.
- Over the last several months, the company's credit performance has been improving relative to that of peers, analyst Jeffrey Adelson said in a note.
- He expects SLM's ( SLM ) net charge-offs to slide 30 basis points Y/Y in each of 2023 and 2024 in the wake of easing "one-time transitory issues," including gap-year underperformance from students who left school during the pandemic.
- Overall, "higher funding costs, lower sale execution price weighs modestly on EPS, but more than offset by improved credit, while loan sale in near future acts as a catalyst," he said.
- The Overweight rating diverges from the Quant system rating of Sell and the average Wall Street analyst rating of Hold.
- Last month, (March 3) SLM announced retention deal with CFO Steven McGarry.
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SLM stock gains after double upgrade to Overweight at Morgan Stanley