Synchrony Financial (SYF) shares fell in the pre-market trade as earnings came in a little below expectations, though the company continued to make progress in key areas.
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SYF dropped 5% despite the company reporting a solid jump in net earnings in its Fiscal fourth quarter as higher interest and fees on loans drove up net interest income.
The credit card provider, which is said to be in talks with Apple (AAPL), posted net earnings of $774 million or $1.91 a share, a little shy of the $1.93 expected. Net interest income was up 3% to $4.6 billion, thanks to higher interest and fees on loans.
Credit Actions Impact Growth for SYF
CFO Brian Wenzel noted that Synchrony’s credit actions between mid-2023 through early 2024 continued to impact new account and purchase volume growth during the fourth quarter.
However, the actions also improved delinquencies, with the provision for credit losses falling $243 million to $1.6 billion in the quarter, which was largely due to a reserve release of $100 million compared with a reserve build of $402 million in the prior year.
Apple and Synchrony Talks
Partnerships are key to the business and a big one could be incoming. Reuters revealed earlier this month that Apple was holding talks with Synchrony and Barclays as potential replacements for Goldman Sachs (GS) as the tech giant’s credit card partner.
Meanwhile the company extended its collaboration with Walmart’s (WMT) Sam’s Club in January, and extended its long-running partnership with JCPenney, which now offers Synchrony Pay Later.
CEO Brian Doubles said: “During the past year, we grew and deepened more than 45 of our existing partner programs and added more than 45 new partners.”
Is SYF a Good Stock to Buy?
Overall, Wall Street has a Strong Buy consensus rating on SYF, based on 14 Buys and four Holds. The average SYF price target of $76.88 implies 10% upside, with the stock up 40% in the last six months.
