As previously reported, Morgan Stanley upgraded SLM to Overweight from Underweight with a price target of $15, up from $14. The firm’s prior rating was based on a view that both the valuation and consensus estimates were not properly baking in credit deterioration within SLM’s private student loan book, but that played out along with Q4 earnings in early February and the stock has sharply underperformed since. Now, though, the stock is mispriced for recent improvement in credit and while loan losses will remain elevated compared to pre-COVID, they will be "lower than market fears," the analyst tells investors.
Published first on TheFly
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