On Thursday, BofA Securities maintained a Buy rating on SLM Corp. (NASDAQ:SLM) with a steady price target of $27.00.
The rating affirmation came even though Sallie Mae reported a third-quarter earnings per share (EPS) of ($0.23), which fell short of both BofA's estimate of $0.07 and the consensus estimate of $0.06. The shortfall was largely attributed to an unexpected increase in provision expenses, which negatively impacted earnings by $0.24 per share.
Despite the earnings miss, Sallie Mae reaffirmed its earnings guidance for the year, indicating confidence in its financial outlook. The company's third-quarter loan originations totaled $2.8 billion, surpassing expectations.
This performance is partly credited to SLM's ability to capture market share, benefiting from the withdrawal of a competitor from the market. This strategic advantage is expected to contribute to robust loan volumes during the first quarter of 2025, which is traditionally a mini-peak season for the company.
The analyst's commentary highlighted Sallie Mae's strong market position and considered the company's valuation to be reasonable. The reassurance of the Buy rating reflects the firm's positive outlook on SLM's market dominance and future performance.
SLM Corp.'s stock rating and price target by BofA Securities remain unchanged following the company's third-quarter financial results. The analyst's perspective underscores Sallie Mae's solid market presence and the potential for continued growth, underpinning the investment firm's confidence in the stock's prospects.
In other recent news, Sallie Mae reported a mixed bag of results for Q3 2024. The company showed a 13% year-over-year increase in private education loan originations, reaching a total of $2.8 billion. However, it also reported a GAAP net loss per common share of $0.23, attributed to allowances for new commitments.
Despite this setback, Sallie Mae's credit quality improved, as evidenced by net charge-offs of $77 million. The company also announced an increase in its quarterly common dividend from $0.11 to $0.13. These are among the recent developments for the company.
In other news, Sallie Mae has revised its 2024 guidance for private education loan origination growth to 8%-9%. The company also reported that it expects net charge-offs to range between $325 million-$340 million.
Amid these changes, Sallie Mae remains optimistic about its future performance and capital return strategy.
InvestingPro Insights
To complement BofA Securities' analysis, InvestingPro data offers additional insights into SLM Corp.'s financial performance and market position. The company's P/E ratio of 7.03 suggests that it is trading at a low earnings multiple, which aligns with the analyst's view of reasonable valuation. This is further supported by an InvestingPro Tip indicating that SLM is "Trading at a low earnings multiple."
SLM's strong market performance is reflected in its impressive 79.48% one-year price total return. This exceptional return is highlighted by another InvestingPro Tip noting a "High return over the last year," which reinforces the company's ability to deliver value to shareholders despite the recent earnings miss.
Looking ahead, the company's profitability prospects appear positive. An InvestingPro Tip reveals that "Analysts predict the company will be profitable this year," which supports Sallie Mae's decision to reaffirm its earnings guidance for the year. This optimism is backed by SLM's robust financial metrics, including a revenue of $1.68 billion over the last twelve months and a strong operating income margin of 58.94%.
For investors seeking more comprehensive analysis, InvestingPro offers 6 additional tips for SLM Corp., providing a deeper understanding of the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.