Benzinga - by Nabaparna Bhattacharya, Benzinga Editor.
BMO Capital Markets analyst James Fotheringham reiterated the Market Perform rating on Ally Financial Inc. (NYSE:ALLY), raising the price target to $37 from $36.
Despite Ally Financial’s fourth quarter small low-quality beat, the analyst lowered near-term estimates by -7%, which is lower than previously modeled NII (slower loan growth) and is only partially offset by lower expected costs (non-interest and tax-related), the analyst writes.
As per the analyst, the company’s fourth-quarter adjusted EPS of $0.45 beat the consensus of $0.44 by +2% due to slightly lower-than-expected compensation costs and higher fees.
The company’s full-year guidance implies lower-than-expected NIM, higher loan losses, and slower loan growth, partly offset by higher other revenues and lower operating costs.
Ally Financial’s reaffirmed mid-term outlook for NIM 4%, EPS $6, and RoTCE mid-teens compares with 2025E consensus forecasts for NIM 3.78%, EPS $5.34, and RoTCE 13.7%.
However, the analyst adds that full-year and mid-term guidance is subject to change with CEO transition, which is expected soon.
The analyst lowered the core EPS estimate by -7% in 2024E (to $3.27 from $3.51).
In contrast, the analyst raised the 2025E EPS estimate by +4% (to $5.69 from $5.48) due to expected NIM recovery and a lower tax rate.
Overall, the company’s earnings are highly sensitive to potential NIM benefits from putatively lower interest rates; however, the analyst adds that slowing loan growth and rising credit costs could partially offset the top-line benefits of higher NIM.
Price Action: ALLY shares are trading higher by 0.17% to $36.38 on the last check Tuesday.
Latest Ratings for ALLY
| Jan 2022 | Credit Suisse | Maintains | Outperform | |
| Jan 2022 | JP Morgan | Downgrades | Overweight | Neutral |
| Jan 2022 | Raymond James | Maintains | Outperform |
View the Latest Analyst Ratings
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.