Synchrony Financial (SYF) Stock Higher Amid Bullish Analyst Note
NEW YORK (TheStreet) -- Synchrony Financial (SYF) - Get Report stock is rising 0.24% to $31 in afternoon trading on Thursday, as Nomura analysts argue that the stock's "fundamental trajectory is up and to the right," Barron's reports.
Synchrony Financial last year spun off from General Electric (GE), which will soon split off its roughly 85% holding in the company in an exchange offer, valued around $21 billion, for its own stock.
Even so, Synchrony Financial should generate annual receivables growth of at least 6%, so long as its private label credit continues to take about 40 basis points from general purpose lending, Nomura said, Barron's reports. Analysts expect the company's growth to fall to 3.6% in 2017.
There's a "good chance" that Synchrony Financial will be able to benefit from four quarters of buybacks in fiscal 2017, Nomura adds, according to Barron's.
Nomura thinks the company will raise its guidance beyond its prior target of a range between 15% and 15.5%, Barron's notes.
Additionally, on Tuesday, Synchrony Financial will replace Genworth Financial (GNW) in the S&P 500.
About 25.03 million shares of Synchrony Financial have been traded so far today, more than double the company's average trading volume of roughly 9.39 million shares a day.
Separately, TheStreet Ratings team rates SYNCHRONY FINANCIAL as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
We rate SYNCHRONY FINANCIAL (SYF) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and notable return on equity. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 4.8%. Since the same quarter one year prior, revenues slightly increased by 8.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
- SYNCHRONY FINANCIAL's earnings per share improvement from the most recent quarter was slightly positive. This year, the market expects an improvement in earnings ($2.64 versus $1.87).
- The gross profit margin for SYNCHRONY FINANCIAL is currently lower than what is desirable, coming in at 30.18%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 16.51% is above that of the industry average.
- You can view the full analysis from the report here: SYF
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.