Analyst Cautions Vulnerability In Finance Stocks, Downgrades Ally Financial And Goldman Sachs But Optimistic On Aircraft Lessors
Portfolio Pulse from Lekha Gupta
BMO Capital Market analyst James Fotheringham downgraded Ally Financial (ALLY) and Goldman Sachs (GS) to Market Perform, citing vulnerability to an impending credit cycle and higher capital requirements. He set price targets of $36 for ALLY and $357 for GS. Fotheringham initiated coverage on aircraft lessors AerCap Holdings (AER) and Air Lease Corp (AL) with Outperform ratings and price targets of $103 and $54, respectively, due to favorable market dynamics. He also initiated coverage on Affirm Holdings (AFRM) and SoFi Technologies (SOFI) with Market Perform ratings and price targets of $44 and $9, respectively, but expects their EPS to be below consensus.
January 10, 2024 | 8:44 pm
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NEGATIVE IMPACT
Ally Financial downgraded to Market Perform with a price target of $36 due to credit cycle concerns and higher capital requirements.
The downgrade reflects concerns over an impending credit cycle and higher capital requirements, which could negatively impact ALLY's stock price in the short term.
CONFIDENCE 85
IMPORTANCE 80
RELEVANCE 90
NEGATIVE IMPACT
Goldman Sachs downgraded to Market Perform with a price target of $357 due to potential revenue pressures and cultural concerns.
The downgrade is based on concerns over volatile global banking & markets revenues and pressures on corporate culture, which could lead to a negative short term impact on GS's stock price.
CONFIDENCE 85
IMPORTANCE 80
RELEVANCE 90
NEUTRAL IMPACT
Affirm Holdings initiated at Market Perform with a price target of $44, but EPS is expected to be below consensus.
AFRM's initiation at Market Perform with a cautious view on EPS being below consensus indicates a neutral short term impact on its stock price.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 80
NEUTRAL IMPACT
SoFi Technologies initiated at Market Perform with a price target of $9, with EPS also expected to be below consensus.
SOFI's initiation at Market Perform and expectations of EPS below consensus suggest a neutral short term impact on the stock price.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 80
POSITIVE IMPACT
AerCap Holdings initiated with an Outperform rating and a price target of $103, benefiting from air travel industry dynamics.
AER's initiation at Outperform with a high price target is due to the company capitalizing on a supply/demand mismatch in the aircraft industry, which is likely to positively influence its stock price in the short term.
CONFIDENCE 85
IMPORTANCE 85
RELEVANCE 90
POSITIVE IMPACT
Air Lease Corp initiated with an Outperform rating and a price target of $54, expected to benefit from lease rate expansion.
AL's positive initiation is based on expected growth in rental of flight equipment and lease rate expansion, suggesting a potential increase in its stock price in the short term.
CONFIDENCE 85
IMPORTANCE 85
RELEVANCE 90