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Wall Street analysts raised their price targets on SLM Corp (NASDAQ:SLM) after the company released its fourth-quarter print Thursday amid an exciting earnings season.
SLM’s fourth-quarter EPS of $0.50 missed the analyst estimate. The net interest income of $362.00 million missed the analyst estimate of $373.96 million.
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SLM expects fiscal 2025 EPS of $3.00-$3.10 versus $3.35 analyst estimate. It expects non-interest expenses of $655 million-$675 million.
Keefe, Bruyette & Woods analyst Sanjay Sakhrani maintained SLM with a Market Perform with a price target of $30.
RBC Capital analyst Jon G. Arfstrom reiterated an Outperform on SLM and raised the price target to $32 from $30.
JP Morgan analyst Richard Shane maintained SLM with a Neutral and raised the price target from $29 to $30.
Keefe, Bruyette & Woods: SLM reported core EPS of $0.50, which compares to Sakhrani’s estimate of $0.58. The miss to the analyst’s EPS estimate was driven by higher provision (-$0.15/share) and lower net interest income (-$0.01/share), partially offset by lower expenses (+$0.02/share) and a lower tax rate (+$0.06/share).
SLM reported a miss relative to Sakhrani’s expectations on higher provisions, while Pre-provision Net Revenue (PPNR) aligned with expectations. Core trends were mixed, with originations and the Delinquency (DQ) rate being better, PPNR and the net charge-off (NCO) rate being in line, and the Net interest margin rate being weaker. The company provided a 2025 outlook with EPS and loan origination growth better than Sakhrani’s expectations, while the NCO rate and expenses are in line.
RBC Capital: Core results were acceptable in a seasonally softer origination quarter. Highlights included substantial loan growth, some modest margin reduction, and a meaningful decrease in expense levels. Credit trends were more mixed with higher NCOs sequentially, though management remains hopeful that losses should continue to normalize lower in 2025 towards its longer-term loss range.
The 2025 outlook calls for solid origination growth and manageable expense levels. Further, the company plans to sell $2 billion in loans in the first quarter of 2025, which should support the updated EPS guide. Arfstrom’s thesis remains consistent, as he noted continued progress in the gradual shift toward a more balanced growth model. However, additional loan sales and buyback activity will likely continue over the near-to-medium term.