UPDATE: Morgan Stanley Reiterates On Ally Financial On Potential 2Q Upside

In a report published Wednesday, Morgan Stanley analyst Betsy L. Graseck reiterated an Overweight rating on Ally Financial ALLY, but removed the $30.00 price target. In the report, Morgan Stanley noted, “June data for ALLY's prime auto securitization trusts show improving credit trends overall, highlighted by annualized net loss rates (ANLs) declining 5bps y/y to 20bps. On a quarterly basis, the prime trusts averaged 21bps of ANLs as compared to 26bps in 1Q14. While we do not yet have June data for non-prime trusts (expected 6/21), non-prime loss trends for April and May have also improved relative to 1Q (ANLs averaging 0.81% 2QTD vs. 1.23% in 1Q). We currently forecast auto NCOs of 80bps in 2Q14, and believe we could see upside to our EPS estimate (currently 34c vs. consensus of 30c), based on better than expected trust data. We estimate the auto NCO ratio could be ~5bps better than forecast for 2Q if current non-prime trends remain in place for June.” Ally Financial closed on Tuesday at $23.25.