Ally Financial Moving Higher With New CEO, Says Morgan Stanley

Ally Financial Inc ALLY fell nearly 20 percent in January, so perhaps it’s not surprising to see the board finally make a move to replace the CEO after months of succession planning. The appointment of a new CEO, Jeffrey J. Brown, is effective immediately. Previously, Brown was president of Ally’s Dealer Financial Services business.

As for catalysts, the analysts outline: (1) return of capital to shareholders through buybacks, dividends and redemptions; (2) operating efficiency improvement; (3) growth in seasonally adjusted U.S. auto sales; (4) expanding monthly credit data; and (5) aggressive used car pricing.

At worst, Morgan Stanley sees a bottom in Ally at $18 per share, a decline of 6 percent from Monday's close. The bull case could see Ally gain to $36 (+89 percent), while Morgan Stanley’s price target for a baseline case is at $27 (+42 percent). The Morgan Stanley analysts see the main differentiation point between the bull and baseline cases as being how aggressively Ally manages its excess capital.

Shares of Ally Financial traded recently at $19.38, up 1.57 percent.