JPMorgan downgraded shares of Ally Financial (NYSE:ALLY) and Guild Holdings Company (GHLD) to Underweight and Essent Group (NYSE:ESNT) to Neutral in a note to clients Wednesday. The firm also raised Navient (NASDAQ:NAVI) to Neutral.
In the note covering consumer finance stocks, the investment bank said that entering the second quarter, they believe investors should take advantage of the recent rally in Consumer Finance names by taking profits and reducing risk.
"While we are not suggesting that the sky is falling, we believe the sector has re-rated too quickly, creating a widening gap between fundamentals (ok) and valuations (full)," wrote the firm.
Analysts added: "We believe that charge-offs are moving toward a cyclical plateau in mid 2024. We emphasize that we do not see this as a 'peak' in which losses begin to abruptly trend lower."
JPMorgan is at or below consensus estimates for 2024 and, with limited exceptions, also "at or below" for 2025.