Synchrony initiated with Buy on risk/reward at Compass Point

Compass Point initiated coverage of Synchrony with a Buy rating and $56 price target. The target reflects a total return of 16% including dividends over the next year. The firm views the current price as a “solid entry point into a highly valuable franchise with strong returns, robust capital and capital generation, and a solid longer-term growth story.” While near-term headwinds persist with uncertainty around the net impact of the new Consumer Financial Protection Bureau credit card late fee rule on profitability, Synchrony’s recent inflection in credit trends, “healthy” medium-term growth prospects, potential capital deployment, and positioning within the private label provide a favorable set-up for relative share price outperformance over the next year, the analyst tells investors in a research note.