After Synchrony (SYF) and OnePay, which is majority-owned by Walmart (WMT), announced they will launch a new credit card program that will go live in the fall, TD Cowen noted that Synchrony will not purchase the existing Walmart card portfolio from Capital One (COF), so this new program will have to be built from scratch. Similar to any de-novo portfolio, it will likely be dilutive at first as Synchrony will need to build reserve as this portfolio builds from the ground up, the analyst tells investors. However, while the firm will need more details from the company, it believes the fact that Walmart through OnePay has decided to come back to Synchrony indicates “favorable negotiating position/economics” for Synchrony in this deal, which it views as a positive for Synchrony. TD has a Buy rating and $68 price target on Synchrony shares.
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