UPDATE: Credit Suisse Raises PT on SLM Corp. on Higher FFELP Cash Flows
In a report published Friday, Credit Suisse analyst Moshe Orenbuch reiterated an Outperform rating on SLM Corp. (NASDAQ: SLM), and raised the price target from $22.00 to $24.00.
In the report, Orenbuch noted, “Using recent disclosures, we increase our price target on SLM from our sum-of-the-parts analysis to $24 from $22, based on a 17% higher level of FFELP projected excess spread cash flows and a forward share count, which takes into account 2013 expected share repurchase activity. We understand SLM's adjustment in FFELP cash flow estimates (up 17% to $9.1Bn) was due to a modestly lower take up assumption on borrower benefits and a slightly lower constant prepayment rate. As a result, our FFELP business present value, which includes servicing and spread income, increases 8% to $5.2Bn. We also update our share count to a forward level (Dec. 2013 estimate) to account for the value inherent in SLM's share repurchases. We forecast $500MM in 2013 share repurchases. Our FFELP business per share value (before floor income) is $12, up from $10.”
SLM Corp. closed on Thursday at $20.07.
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