Ally Financial Stock in Tactical Outperform List at Evercore
Evercore ISI analysts maintained their In Line rating and a price target of $30.00 on Ally Financial (NYSE:ALLY). However, they now included the stock in the Tactical Outperform List due to its apparent oversold condition in the short term.
The analysts explained that Ally Financial's fundamental prospects and valuation have been negatively affected by various factors, including challenging interest rate conditions (yield challenges and funding pressures), a decline in consumer credit quality, and the anticipated effects of TLAC (Total Loss-Absorbing Capacity) and B3EG (Basel III Enhanced Leverage Ratio) on returns.
Nevertheless, the analysts believe that recent efforts to control expense growth, combined with the stabilization or potential improvement in used car values, could lead to short-term upside potential for the stock, which is currently trading at a discounted valuation.
| Symbol | Price | %chg |
|---|---|---|
| V.BA | 20050 | 0.02 |
| MA.BA | 18096 | 0 |
| AXP.BA | 20138.5 | -0.01 |
| BFIN.JK | 865 | -1.16 |
Ally Financial Shares Plunge 5% Following Q1 EPS Miss
Ally Financial (NYSE:ALLY) shares fell more than 5% intra-day today after the company reported its Q1 results, with EPS of $0.82 missing the Street estimate of $0.86. Revenue came in at $2.1 billion, better than the Street estimate of $2.07 billion.
Net financing revenue decreased 4.3% sequentially to $1.6 billion as higher earning assets were offset by a 14 bps sequential decline in the margin to 3.51%. Earning asset yields increased 47 bps sequentially to 6.71%, while funding costs increased 66 bps to 3.39%.
Management remains confident in the trajectory of earnings over time, though navigating near-term margin, funding, and credit dynamics remains the focus.
Ally Financial Shares Surge 23% Since Q4 Earnings Release
Ally Financial (NYSE:ALLY) shares gained more than 23% since the company’s reported Q4 results on Friday morning, with EPS of $1.08 coming in better than the Street estimate of $0.97. Revenue was $2.2 billion, beating the Street estimate of $2.06 billion.
Although normalization in retail auto credit and deposit pricing is accelerating and causes investor concerns, management expressed confidence that as these dynamics stabilize.
Management is optimistic that the margin can trough at approximately 3.50% in 2023, and with asset repricing tailwinds, can improve to 3.75%-4.00% in 2024.
