Synchrony Financial (SYF) Stock Upgraded at BMO
NEW YORK (TheStreet) -- Synchrony Financial (SYF) - Get Report stock is gaining 0.89% to $31.63 in early morning trading on Monday after it was upgraded to "outperform" from "market perform" at BMO Capital Markets.
The firm maintained its $36 price target after the consumer financial services provider completed its spin-off from General Electric Co. (GE) on November 17.
"We believe the split-related technical pressures on Synchrony Financial shares have now subsided and that the market's view of Synchrony Financial shares should return to a fundamental assessment," BMO said in an analysts note.
Dividends and buybacks are expected to start in the first quarter of 2016, despite the conservative guidance provided by management.
Synchrony Financial has a strong capital position, more than 40% of the store card market and higher profitability than its peers, analysts added.
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 4.7%. 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.
- Net operating cash flow has slightly increased to $1,317.00 million or 1.69% when compared to the same quarter last year. Despite an increase in cash flow, SYNCHRONY FINANCIAL's cash flow growth rate is still lower than the industry average growth rate of 15.59%.
- The gross profit margin for SYNCHRONY FINANCIAL is currently lower than what is desirable, coming in at 31.50%. 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.