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Investing.com - BofA Securities downgraded Navient Corporation (NASDAQ:NAVI) from Neutral to Underperform and lowered its price target to $12.00 from $15.00 on Thursday. The stock, currently trading at $13.64, appears overvalued according to InvestingPro analysis, with a P/E ratio of 42.8x and revenue expected to decline this year.
The downgrade reflects BofA’s concerns about Navient’s transition from cost-cutting measures to growth initiatives, which the firm believes carries "significantly higher execution risk."
BofA Securities noted that while Navient has successfully executed on expense reductions and capital allocation in its Phase 1 strategy, the company’s planned Phase 2 growth initiatives appear more challenging.
The research firm pointed out that Navient has not yet disclosed specific details about these growth initiatives, though early indications suggest they might include additional loan products, fee-based offerings, or expanded in-school lending.
BofA analyst commentary emphasized that all of these potential growth avenues "come with near-term risks," contributing to the more cautious outlook on Navient’s stock.
In other recent news, Navient reported its Q2 2025 earnings, which fell short of analyst expectations. The company’s earnings per share (EPS) were $0.20, missing the forecasted $0.29, representing a surprise of -31.03%. Additionally, revenue came in at $164 million, slightly below the anticipated $164.51 million. These results have drawn attention from investors and analysts alike. In another development, Navient’s board of directors declared a dividend of $0.16 per share for the third quarter of 2025. This dividend will be distributed to shareholders of record as of September 5, 2025, with payment scheduled for September 19, 2025. Analysts from various firms have been closely monitoring these developments, given their potential impact on the company’s financial outlook.
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