Sallie Mae’s Growth Potential Boosted by Market Shifts and Policy Changes

TD Cowen analyst Moshe Orenbuch has maintained their bullish stance on SLM stock, giving a Buy rating on February 18.

Moshe Orenbuch has given his Buy rating due to a combination of factors that highlight SLM’s strong market position and growth potential. One significant factor is the impact of Discover’s exit from the student lending market, which allowed Sallie Mae to capture a substantial portion of Discover’s market share. This shift has resulted in a notable increase in Sallie Mae’s loan originations, positioning the company as a dominant player in the private student loan sector.
Additionally, potential policy changes, such as the modification or elimination of the Grad PLUS program, could significantly expand the total addressable market for private student loans. If Grad PLUS is eliminated, a large portion of its market could transition to private lenders, potentially increasing Sallie Mae’s market share and profitability. These factors, combined with a favorable loan sale environment and declining benchmark rates, have led to an increased price target for SLM, reinforcing the Buy rating.

In another report released on February 18, Barclays also maintained a Buy rating on the stock with a $38.00 price target.