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Investing.com - RBC Capital has reduced its price target on SLM Corp. (NASDAQ:SLM) to $31.00 from $37.00, while maintaining an Outperform rating on the student loan provider’s stock. Currently trading at $25.53, with a market capitalization of $5.3 billion and a P/E ratio of 13, InvestingPro analysis suggests the stock is slightly undervalued based on its Fair Value model.
The price target adjustment represents a $6.00 reduction from the firm’s previous valuation, though RBC Capital continues to view SLM’s long-term prospects favorably, as indicated by the unchanged Outperform rating. The company has maintained profitability over the last twelve months, with a gross profit margin of 100%.
In its analysis, RBC Capital noted it appreciates "the longer-term origination trends at the company," suggesting confidence in SLM’s ability to generate new loans despite the target reduction.
The research firm expressed particular interest in receiving updates on SLM’s credit expectations during the upcoming quarterly report, citing "some signs of erosion in the monthly trust data during the quarter."
RBC Capital analyst Jon Arfstrom authored the research note, which comes as investors await more clarity on how potential credit quality issues might affect SLM’s performance in the current economic environment.
In other recent news, Sallie Mae reported second-quarter earnings that did not meet analyst expectations. The company posted earnings per share of $0.32, falling short of the consensus estimate of $0.49. Additionally, the provision for credit losses increased significantly to $149 million, compared to $17 million in the same quarter last year. This increase was primarily due to a release of provision from a loan sale in the previous year, an increase in loan commitments, and changes in the economic outlook. Despite these challenges, TD Cowen reiterated its Buy rating on SLM Corp, maintaining a $40.00 price target, suggesting that recent market concerns over delinquencies may have been overstated. Meanwhile, Wells Fargo initiated coverage on SLM Corp with an Overweight rating and a $38.00 price target, citing the company’s attractive valuation and strong market position in private student lending. These developments reflect a mixed outlook for investors, with some analysts expressing confidence in the company’s long-term prospects.
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