Market Overview

Synchrony Financial Is A 'Clear Leader In An Underappreciated' Market, Buckingham Says In Bullish Initiation

Synchrony Financial Is A 'Clear Leader In An Underappreciated' Market, Buckingham Says In Bullish Initiation
Related SYF
Barron's Picks And Pans: Alphabet, Apple, CBS, Synchrony And More
Benzinga's Top Upgrades, Downgrades For August 3, 2018
Synchrony July credit-card delinquency rate improves from June (Seeking Alpha)

Synchrony Financial (NYSE: SYF), a consumer financial services company mostly known for offering private label credit cards, is a "clear leader in an underappreciated subsegment of the card market," according to Wall Street's newest bull analyst.

The Analyst

The Buckingham Research Group's Chris Brendler initiated coverage of Synchrony Financial's stock with a Buy rating and $42 price target.

The Thesis

Synchrony Financial is well positioned to continue benefiting from a resurgence in traditional retailers offering their own branded credit cards, Brendler said in the Wednesday initiation note. Traditional retailers have a difficult time keeping up with data-driven e-commerce — and Synchrony's "sophisticated tech-powered marketing expertise" makes it a critical partner for the retail sector at a time when it is needed the most, the analyst said. 

Private label credit card offerings are more exposed to a tough retail environment, but Synchrony is preferred over its peers for three reasons, the analyst said. They are:

  • Superior disclosure, including FICO scores and retail partners.
  • A strong balance sheet with industry-best excess capital and regulatory relief in sight.
  • A higher degree of confidence in the company's guidance and medium-term outlook.

Synchrony Financial's stock is "abnormally inexpensive" at 8.6x consensus 2019 EPS estimates, Brendler said. Buckingham's $42 price target is based on a 9.5x multiple on the analyst's 2019 EPS estimate of $4.43, which is still a discount to the stock's three-year average FY2 multiple of 10.3x.

Price Action

Synchrony shares were up 0.25 percent at $36.77 in Wednesday morning trading. 

Related Links:

Bank Deregulation Has 80% Likelihood Of Passage, Says Height Capital

The Best Banks To Buy: Why This Analyst Likes Capital One, Discover And Synchrony Financial

Latest Ratings for SYF

Aug 2018UBSUpgradesSellNeutral
Jul 2018BMO CapitalMaintainsOutperformOutperform
Jul 2018BarclaysDowngradesOverweightEqual-Weight

View More Analyst Ratings for SYF
View the Latest Analyst Ratings

Posted-In: Chris Brendler credit cards financial services retailersAnalyst Color Price Target Initiation Analyst Ratings Best of Benzinga


Related Articles (SYF)

View Comments and Join the Discussion!

Adidas Continues North American Tear With 31% Sales Growth

This Day In Market History: The Panic Of 1907