SYF stock resilient amid BNPL competition, analysts say

On Wednesday, a new quarterly analysis by Citizens JMP has shed light on the evolving landscape of the Buy Now/Pay Later (BNPL) market and its impact on private label card issuers. The study examined the online checkout pages of Synchrony Financial’s (NYSE:SYF) and Bread Financial’s (NYSE:BFH) retail partners, revealing a mixed penetration of BNPL services. According to InvestingPro data, Synchrony Financial, with its robust market capitalization of $22.78 billion, has demonstrated remarkable resilience with a 36.17% return over the past year.

Synchrony Financial, with a price target of $68, appears to be weathering the competitive storm better than its counterpart. The analysis showed that approximately 25% of SYF’s partners had non-SYF BNPL competitors integrated at checkout. Additionally, SYF’s in-house BNPL platform is gaining traction, with 20% of surveyed partners including it as a payment option. This includes a significant partnership with Lowe’s (NYSE:LOW), a top-three customer for SYF. The company’s broad product suite, including a partnership with Atlanticus’ Fortiva card, offers a second-look option to underwrite a wider range of consumers, enhancing customer conversion for partners. InvestingPro analysis shows SYF trading near its Fair Value, with a healthy P/E ratio of 8.08 and maintaining a consistent dividend yield of 2.01%. InvestingPro subscribers can access 8 additional key insights about SYF’s financial health, which has earned a "GREAT" overall score.

Bread Financial, on the other hand, is facing stiffer competition in the BNPL space. About 85% of BFH’s retail partners surveyed provided an integrated BNPL option at their online checkout, with Afterpay and Klarna each appearing six times among BFH merchant partners’ checkout pages. However, Affirm Holdings (NASDAQ:AFRM), with a price target of $75, did not show any integration overlap with these providers. Notably, Affirm recently announced an integration with Mattress Firm, a key partner of Synchrony Financial.

The report indicates that the checkout page real estate is becoming increasingly crowded with various payment and financing options, including BNPL services like Affirm and Klarna, as well as digital wallets such as Google (NASDAQ:GOOGL) Pay and Shop Pay, for which Affirm is the white label provider. This trend suggests that private label card issuers may be more vulnerable to losing market share to BNPL services, which offer similar loyalty and promotional services to merchants.

Despite the growing presence of BNPL offerings, analysts remain constructive on Synchrony Financial while maintaining a neutral stance on Bread Financial. The latter is experiencing more aggressive competition from BNPL services targeting its lower-ticket, discretionary partner base. In contrast, SYF’s partners displayed around 40% fewer payment options at checkout on average compared to BFH’s partner base, indicating a lower level of competition from BNPL offerings for SYF.

Overall, the Citizens JMP analysis underscores the shifting dynamics in the payment industry, with BNPL offerings carving out a significant presence and potentially reshaping consumer financing habits, particularly in the private label card segment. For investors seeking deeper insights into payment industry leaders like SYF, InvestingPro offers comprehensive research reports covering 1,400+ US stocks, transforming complex financial data into actionable intelligence for smarter investment decisions.

In other recent news, Synchrony Financial reported impressive financial results for the first quarter of 2025, surpassing analysts’ expectations. The company achieved an earnings per share (EPS) of $1.89, exceeding the forecasted $1.67, and reported revenue of $4.46 billion, significantly above the anticipated $3.79 billion. Synchrony Financial also renewed partnerships with major brands, including Sun Country Airlines and Ashley Furniture, marking strategic growth in their business relationships. Despite a challenging economic environment, the company reported net earnings of $757 million, although net revenue fell by 23% year-over-year to $3.7 billion. Analysts at Fitch upgraded Synchrony’s credit rating to BBB with a stable outlook, highlighting the company’s strong balance sheet and execution. Synchrony expects low single-digit growth in loan receivables for the year and has set a full-year net revenue guidance of $15.2 to $15.7 billion. The company also announced a new share repurchase authorization of $2.5 billion and increased its regular quarterly dividend by 20% to $0.30 per common share. These developments reflect Synchrony Financial’s robust performance and strategic initiatives in the financial services sector.

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