UPDATE: Bank of America Downgrades Santander Consumer USA Holdings to Underperform, Lowers PT Following Investor Day

In a report published Thursday, Bank of America analyst Kenneth Bruce downgraded the rating on Santander Consumer USA Holdings SC from Neutral to Underperform, and lowered the price target from $19.00 to $16.00. In the report, Bank of America noted, “Following its investor day, we are downgrading Santander Consumer (SC) to Underperform from Neutral and lowering our Price Objective to $16 from $19. Our new P.O. is ~8x our new 2015 adj. diluted EPS estimate of $1.95. We came away from SC's investor day incrementally more bearish on the company's NT earnings outlook as we expect SC's migration to higher loss rates to weigh on the company's earnings and erode confidence in the stock. Loss rates are increasing due to a number of factors, including seasoning of 2013 vintages, Q4 seasonal factors and SC's mix-shift toward deeper subprime. Along with SC's conservative reserving methodology, we expect these factors to continue to drive provision levels higher and dampen EPS growth over the near-to-medium term.” Santander Consumer USA Holdings closed on Wednesday at $18.63.