Ally Financial (ALLY) Stock Gaining Today After Credit Suisse Price Target Raise
NEW YORK (TheStreet) -- Ally Financial (ALLY) - Get Report stock is up 3.07% to $21.47 in pre-market trading Thursday after Credit Suisse increased its price target to $25 from $24, while maintaining its 'neutral' rating.
Ally was one of the banks to recently pass the Fed's stress test.
"Given faster preferred stock retirement, we believe management will be able to return common capital to shareholders sooner-than-expected," analysts said.
Credit Suisse noted that Ally Financial was granted permission to repurchase $1.3 billion of the Series G preferred, beginning immediately, and $1 billion of the Series A preferred, in early 2016.
"This is about $900 million more capital return than we had expected," the firm said, adding that the financial services company was approved to repurchase $500 million of TRUPS and $200 million of premiums on higher cost debt.
In order for Ally to pay common dividends or repurchase common shares, the company must retire all Series G preferreds or achieve investment grade credit ratings from both S&P and Moody's, Credit Suisse explained in their analysis.
Credit Suisse increased their 2015 earnings estimates to $2.05 from $1.96 and 2016 earnings estimates to $2.34 from $2.17 to account for lower preferred stock balances. The price target was increased to $25 to reflect faster capital return.