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Why Synchrony Financial Remains Barclays' Most Attractive Credit Card Stock

Why Synchrony Financial Remains Barclays' Most Attractive Credit Card Stock
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Barclays said Synchrony Financial (NYSE: SYF) remains its most attractive credit card stock following its recently announced capital plans.

Last week, the company answered investors' biggest question when it announced its first dividend and buyback program ($0.13/share and $952 million, respectively). In June, however, Synchrony Financial startled investors after disclosing unexpected surges in future charge-off assumptions.

Last month, Synchrony Financial said it now sees "a 20–30 basis point increase in our net charge-off rates as we look out over the next 12 months. As a result, starting in the second quarter of 2016, we expect higher reserve builds, with our allowance coverage ratio (allowance for loan losses as a percent of end of period loan receivables) likely to increase 20–30 basis points from the first quarter of 2016."

Related Link: Capital One And Synchrony Are BMO's Top Consumer Finance Picks

"Despite June's NCO surprise, SYF remains our most attractive credit card stock as it's the most insulated from the increasing rewards expenses as the largest private label issuer," analyst Mark DeVries wrote in a note.

For the second quarter, the analyst still expects robust growth and stable margins, although investors may fixate on any further credit trend commentary.

DeVries has an Overweight rating and $41 price target on the shares of Synchrony, which was recently seen trading at $28.11, up 0.68 percent on the day.

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Latest Ratings for SYF

Apr 2018Morgan StanleyMaintainsEqual-WeightEqual-Weight
Apr 2018BMO CapitalMaintainsOutperformOutperform
Apr 2018RBC CapitalInitiates Coverage OnOutperform

View More Analyst Ratings for SYF
View the Latest Analyst Ratings

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