Synchrony Financial: Near-Term Investment Headwinds but Compelling 2027 Earnings Upside Support Buy Rating

In a report released today, Moshe Orenbuch from TD Cowen maintained a Buy rating on Synchrony Financial, with a price target of $95.00.

Moshe Orenbuch has given his Buy rating due to a combination of factors that reflect both solid recent performance and an attractive longer‑term outlook. Synchrony Financial delivered fourth-quarter earnings that exceeded both his and the market’s expectations, primarily because credit-loss provisioning was lower than anticipated, even as credit quality remains sound. While net interest income and expenses were somewhat weaker, loan growth and purchase volumes tracked broadly as expected, and share repurchases were stronger than he had modeled. Management’s 2026 guidance generally aligns with his assumptions for loan expansion and loss levels, and although the earnings outlook is slightly softer, it is consistent with consensus expectations.

At the same time, Orenbuch recognizes that the next two years will be investment-heavy as Synchrony builds reserves to support growth and absorbs higher operating costs tied to new programs such as Walmart/OnePay. These factors will likely weigh on near-term operating leverage, with the most pronounced reserve impact expected in 2026 and some offset from reductions in qualitative reserves. However, he anticipates that starting in 2027 the company should begin to show positive operating leverage as growth investments start to pay off. Based on his updated earnings forecasts of $9.35 for 2026 and $10.35 for 2027, he derives a $95 price target using a 9x multiple on 2027 EPS, which in his view offers sufficient upside to justify maintaining a Buy recommendation despite the interim cost pressures and a macro backdrop that assumes a modest rise in unemployment.

In another report released yesterday, TipRanks – PerPlexity also downgraded the stock to a Buy with a $86.00 price target.