Morgan Stanley upgrades consumer finance stocks, expects decline in delinquencies, and projects 15% EPS growth

From Investing.com: 2024-12-28 18:00:00

Morgan Stanley upgrades consumer finance stocks to “attractive” due to positive fundamentals and regulatory environment. Delinquencies expected to continue declining in 2025. EPS growth projected at 15%, fastest in four years. GOP control may lead to lighter regulatory pressure, benefiting companies like Synchrony Financial and Bread Financial.

Synchrony upgraded to “overweight” with target price raised to $82. Bread Financial also upgraded to “overweight” with target up to $76. Late fees account for 20-25% of BFH revenues. Probability of $8 late fee cap implementation reduced, balancing earnings outlook.

Analysts anticipate rollback or failure of late fee rule passing courts. Loan growth slowdown a concern, with card loans expected to stabilize at 3%-4%. Risks include higher valuations and credit quality uncertainties, but optimism remains for deregulation beneficiaries and firms with EPS drivers in the coming year.



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