Is Lawsuit Pressure Over Delinquency Disclosures Altering The Investment Case For SLM (SLM)?

Simply Wall St.01-16

In recent months, SLM Corporation has faced multiple securities class action lawsuits alleging misleading disclosures about early-stage delinquencies and the effectiveness of its loss mitigation and ...

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These allegations challenge prior views of stable credit performance and robust loss mitigation, raising fresh questions about how reliable earlier assessments of SLM’s asset quality and risk controls may have been. Against this backdrop, we’ll examine how the alleged disclosure issues around delinquency trends could affect SLM’s previously bullish investment narrative. This technology could replace computers: discover 29 stocks that are working to make quantum computing a reality.AdvertisementSLM Investment Narrative RecapTo own SLM today, you need to believe that private student lending remains an attractive niche and that the company can manage credit risk without eroding profitability. The current lawsuits over alleged misstatements on early-stage delinquencies make credit quality the central near term risk, while the upcoming Q4 2025 earnings release on 22 January 2026 is likely the key catalyst. If the disclosures meaningfully change the picture on asset quality, that catalyst could be affected. The most relevant development here is the wave of securities class actions tied to claims that SLM understated early-stage delinquencies and overstated its loss mitigation capabilities. These allegations cut directly across a core part of the earlier bullish thesis, which leaned heavily on “strong credit performance” and “effective loan modification programs” as support for stable earnings. How the company addresses these points around its 22 January update will matter for the credibility of that narrative. Yet behind the recent lawsuits, investors should be aware that... Read the full narrative on SLM (it's free!)SLM's narrative projects $2.0 billion revenue and $918.9 million earnings by 2028. This requires 17.4% yearly revenue growth and about a $493.6 million earnings increase from $425.3 million today.Uncover how SLM's forecasts yield a $31.82 fair value, a 18% upside to its current price.Exploring Other PerspectivesSLM 1-Year Stock Price Chart Two members of the Simply Wall St Community currently see SLM’s fair value between US$31.82 and US$35.40, compared with recent prices below analyst targets. Given the fresh focus on rising early-stage delinquencies and litigation risk, it is worth weighing these different views side by side before deciding how SLM’s earnings profile might evolve.Explore 2 other fair value estimates on SLM - why the stock might be worth just $31.82!Build Your Own SLM NarrativeDisagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.A great starting point for your SLM research is our analysis highlighting 1 key reward and 4 important warning signs that could impact your investment decision.Our free SLM research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate SLM's overall financial health at a glance.Searching For A Fresh Perspective?Right now could be the best entry point. These picks are fresh from our daily scans. Don't delay:Outshine the giants: these 25 early-stage AI stocks could fund your retirement.Trump has pledged to \"unleash\" American oil and gas and these 22 US stocks have developments that are poised to benefit.The end of cancer? These 29 emerging AI stocks are developing tech that will allow early identification of life changing diseases like cancer and Alzheimer's.  This article by Simply Wall St is general in nature. We provide commentary based on historical data\n    and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your\n    financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n    Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n    Simply Wall St has no position in any stocks mentioned.New: Manage All Your Stock Portfolios in One PlaceWe've created the ultimate portfolio companion for stock investors, and it's free.• Connect an unlimited number of Portfolios and see your total in one currency• Be alerted to new Warning Signs or Risks via email or mobile• Track the Fair Value of your stocksTry a Demo Portfolio for FreeHave feedback on this article? Concerned about the content? Get in touch with us directly. 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