TD Cowen analyst Moshe Orenbuch downgraded Navient to Underperform from Market Perform with a price target of $15, down from $17. Navient earns “floor income” on certain FFELP loans and about $5B of that has been hedged, says the analyst, who notes that over 50% of these hedges will expire in 2024 and 20% in 2025. This will drive sharper contraction in FFELP net interest income in 2024-2025, says the analyst, who lowered the firm’s EPS estimates for 2024 to $2.50 and established a 2025 estimate of $2.25, which are 9% and 19% below consensus, respectively.
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