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Ally Financial stock PT raised by TD Cowen on NIM outlook, solid fees

Published 2024-04-19, 07:06 a/m

On Friday, Ally Financial (NYSE: NYSE:ALLY) saw its price target increased to $43.00 from $42.00 by TD (TSX:TD) Cowen, while the firm maintained a Hold rating on the stock. The move comes after Ally Financial's recent performance and management comments indicating a positive outlook for the company.

In their latest financial quarter, Ally Financial reported results that have been interpreted as moderately positive. The company expects a better net interest margin (NIM) in the second quarter. Additionally, fee income was strong, bolstered by higher insurance revenues, and the provision for credit losses was better than anticipated.

Ally Financial experienced a $15 million benefit to provision expenses, translating to a $0.04 impact on earnings per share (EPS) in the first quarter of 2024. This improvement was largely due to the deconsolidation of $1.1 billion in retail auto loans through the securitization market. Notably, this quarter marks Ally's second significant loan sale, following a $1.7 billion sale in the fourth quarter of 2023.

Management at Ally Financial has clarified their strategy, stating they are not transitioning to an originate-to-distribute model, as this could lead to inconsistent volumes for dealers. However, they are open to exploring further opportunities in terms of loan sales. Such strategies are aimed at enabling Ally Financial to manage its capital more aggressively and effectively.

InvestingPro Insights

Following the update by TD Cowen, real-time data and insights from InvestingPro reveal further aspects of Ally Financial's (NYSE: ALLY) market position and future potential. With a market capitalization of $11.77 billion and a P/E ratio standing at 14.65, Ally Financial is navigating through a challenging financial landscape. Notably, the company has managed to maintain its dividend payments for nine consecutive years, showcasing a commitment to shareholder returns despite the pressures on gross profit margins.

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InvestingPro Tips highlight that while analysts have revised their earnings expectations downwards for the upcoming period, they also predict Ally Financial will remain profitable this year. This is supported by the company's performance over the last twelve months, where it was indeed profitable. Additionally, investors have shown increased confidence in the stock, as evidenced by a large price uptick over the last six months, with a 60.51% total return in that period.

For readers looking to delve deeper into Ally Financial's financial metrics and to access a broader range of analytical tools, InvestingPro offers additional tips for a comprehensive understanding of the company's position. By using the coupon code PRONEWS24, readers can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, which includes a total of 6 additional InvestingPro Tips for Ally Financial. These insights could be invaluable in making informed investment decisions.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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