Navient Corp. (NAVI) surpassed Q2 earnings expectations on lower provisions for loan losses. Shares of the student loans provider rallied 2.9% in the extended trading session on Tuesday.
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Adjusted core earnings per share came in at $0.98, beating the consensus estimate of $0.85, and increased 7.7% from last year’s quarter.
The company reported Q2 revenues of $468 million, down 4.9% from the same quarter last year. Lower net interest income was partly offset by rise in other income. (See Navient stock chart on TipRanks)
During the reported quarter, Navient originated about $1.3 billion Private Education Refinance Loans, compared to $238 million in the same quarter last year. As of June 30, the company held FFELP Loans worth $55.6 billion and Private Education Loans of $19.7 billion, down 8.8% and 8.1%, respectively, from the year-ago quarter.
The CEO and President of Navient, Jack Remondi, said, “Our optimized balance sheet and high-quality education loan portfolio keep driving value and solidifying the strength of our franchise, and we continue to build our business by originating high-quality private education loans and delivering high-value services to our business processing segment clients.”
On July 19, Jefferies analyst John Hecht assigned a Buy rating to the stock with a price target of $23 (upside potential of 12.1%).
Hecht said, “Given the compelling strength in the operating environment, mixed with anticipated loan demand recovery for the group, we expect NAVI to perform well into ’22… The near-term operating environment improves as demand has largely resumed, the company has more near term organic growth opportunities, and credit remains strong.”
Consensus among analysts is a Moderate Buy based on 5 Buys and 3 Holds. The average Navient price target stands at $20.06 and implies downside potential of 2.2% from current levels.
TipRanks’ Hedge Fund Trading Activity tool shows that confidence in Navient is currently Very Positive, as the cumulative change in holdings across all 7 hedge funds that were active in the last quarter was an increase of 2 million shares.
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