TD Cowen analyst Moshe Orenbuch maintained a Sell rating on Navient yesterday and set a price target of $12.00.
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Moshe Orenbuch has given his Sell rating due to a combination of factors affecting Navient’s financial performance and outlook. The company’s recent quarterly earnings were below expectations, with core earnings per share falling short of both the analyst’s and market consensus estimates. This shortfall was primarily due to weaker credit performance, which led to lower net interest income and increased provisions for loan losses. Additionally, Navient reduced its earnings guidance for 2025, reflecting a more challenging macroeconomic environment and rising delinquencies.
Another concern highlighted by Orenbuch is the company’s operating expenses, which exceeded estimates and are projected to remain elevated. The scaling of Earnest’s originations is expected to further drive up costs. Furthermore, while Navient aims to capture a significant share of the privatized graduate loan market, uncertainties remain regarding the profitability of this segment. The increased cost of customer acquisition in the graduate market and mixed signals about the company’s strategic direction contribute to the cautious outlook, justifying the Sell rating.