Buy Rating for Synchrony Financial: Attractive Valuation and Enduring Mitigants Drive Confidence

Analyst Mihir Bhatia from Bank of America Securities reiterated a Buy rating on Synchrony Financial (SYF – Research Report) and keeping the price target at $85.00.

Mihir Bhatia has given his Buy rating due to a combination of factors that highlight the attractiveness of Synchrony Financial’s business model. Despite concerns about the sustainability of certain mitigant actions, Bhatia believes these concerns overshadow the core strengths of the company. The stock is trading at a valuation that is considered attractive, particularly given the improving credit conditions. Even if the mitigants are withdrawn sooner than expected, the valuation remains appealing.
Bhatia also emphasizes that the mitigants, such as higher APRs and paper statement fees, are likely to be more enduring than some investors fear. These measures are expected to enhance net interest margins beyond current consensus estimates. Additionally, improving credit metrics and potential for lower reserve rates could further bolster the company’s financial performance. As a result, Bhatia has increased his earnings per share estimates for the coming years and maintains a price objective of $85, reflecting confidence in the company’s future prospects.

In another report released on February 20, Morgan Stanley also maintained a Buy rating on the stock with a $82.00 price target.