SLM Offers Attractive Entry Point Amid Improving Setup, Morgan Stanley Says

MT Newswires Live10-12 23:04

SLM (SLM) shares are offering an attractive entry point amid an improving setup, Morgan Stanley said in a report Monday.

The report said sentiment has turned negative over the last month as higher interest rates and credit concerns drove the shares down 15%.

"But with shares only trading at ~6x P/E, we now think SLM offers an attractive entry point ahead of a strong earnings ramp from here, bolstered by capital-light economics from its new private credit partnerships," the note said.

A second capital-light partnership is the next catalyst, helping drive EPS upside versus consensus, the note said, adding that credit is still on watch, but data suggests metrics stabilizing.

Morgan Stanley upgraded SLM to overweight from equal weight and raised its price target to $30 from $28.

Price: 23.31, Change: +0.79, Percent Change: +3.51

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