Morgan Stanley Reiterates Overweight Rating, Removes PT on Ally Financial Following August Prime Trust Data

In a report published Tuesday, Morgan Stanley analyst Betsy L. Graseck reiterated an Overweight rating on

, but removed the $30.00 price target. In the report, Morgan Stanley noted, “August data for ALLY's prime auto trusts showed credit trends in-line with seasonal expectations, with upticks in both net losses and DQs. Gross charge-offs were flat with year-ago levels at 0.82%, though recovery rates are starting to normalize. Annualized net loss rates rose 2bps m/m and 4bps y/y to 22bps, and total DQs were up 10bp m/m. Assuming typical September seasonality, ANLs at the prime trusts are tracking ~23bps in 3Q vs. an estimated 17bps in 2Q. August data from Ally's AFIN non-prime trusts (expected 9/22) will give a clearer picture into 3Q credit trends as it is a bigger driver of losses; we forecast total auto NCOs of 80bps for 3Q14, up 22bps from 2Q.” Ally Financial closed on Monday at $24.04.