SLM price target raised by $3 at Wedbush, here’s why

Wedbush analyst David Chiaverini raised the firm’s price target on SLM to $21 from $18 and keeps an Outperform rating on the shares. Sallie Mae held an investor forum in which it outlined its strategy as it approaches the end of its CECL phase-in period on January 1, 2025. The main takeaway is the company expects to transition to a strategy that balances its successful share repurchase strategy with increased balance sheet growth, which should generate more predictable revenue and EPS growth, the firm notes. The example provided by the company to illustrate the new strategy’s impact on the financials implied EPS growth of 10% annually over the five-year time horizon. Wedbush believes de-emphasizing gain-on-sale revenue in favor of more predictable earnings driven by increased net interest income should drive a higher earnings multiple for SLM.