Navient, the Financial sector company, was revisited by a Wall Street analyst today. Analyst Moshe Orenbuch from TD Cowen maintained a Sell rating on the stock and has a $11.00 price target.
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Moshe Orenbuch has given his Sell rating due to a combination of factors influencing Navient’s financial outlook. One of the primary concerns is the expansion into other credit products, such as personal loans, which may entail higher reserves and capital requirements compared to the current student loan refinance offerings. This shift could strain Navient’s financial resources and impact its profitability.
Another factor contributing to the Sell rating is the potential impact of the Grad PLUS opportunity. While Navient aims to capture a significant share of the Grad PLUS market, the upfront reserve requirements and acquisition costs could reduce the company’s tangible common equity ratio and tie up substantial capital. Additionally, the transition from an originate-to-hold to an originate-to-sell model with third-party investors may take time, further affecting earnings per share in the near term. These challenges present risks to Navient’s financial performance, leading to the Sell recommendation.