Navient downgraded to Underperform at BofA on turnaround execution risk

As previously reported, BofA downgraded Navient (NAVI) to Underperform from Neutral with a price target of $12, down from $15. While the firm appreciates the company’s execution on cost cutting and business divestments, it views the “Phase 2” growth initiatives as more difficult than the “Phase 1” focus on expense reductions and capital allocation and believes a shift to growth has “significantly higher execution risk,” the analyst tells investors. Early indications suggest additional loan products, fee-based products, or leaning further into in-school lending are potential options, but all of these come with near-term risks, the analyst added.