Update shared on 16 Nov 2025
Analysts have lowered their average price target for SLM by a notable margin. The shift from around $40 to $31 is due to rising concerns over credit trends, ABS performance, and macroeconomic headwinds, even as long-term guidance remains cautiously optimistic.
Analyst Commentary
Recent Street research presents a mixed outlook on SLM, reflecting both confidence in the company's strategic initiatives and caution regarding macroeconomic uncertainties.
Bullish Takeaways- Bullish analysts highlight improvements in near-term credit performance, noting that tightened underwriting standards and prudent origination have strengthened the company's risk profile.
- Optimism is fueled by a resilient consumer finance market. Lower interest rates are cited as a factor lessening downside risks across the sector.
- Some see recent adjustments in financial models and guidance as supportive of elevated price targets over the long term. Management maintains a positive credit outlook.
- Continued optimism prevails for SLM’s earnings potential, supported by disciplined execution and sector trends that favor sustained profitability.
- Bearish analysts are increasingly cautious about credit trends. They emphasize concerns over asset-backed securities performance and potential credit headwinds that could impact valuation.
- Challenging macroeconomic conditions, such as the resumption of student loan repayments and a softening job market for graduates, are adding to the uncertainty for SLM’s growth prospects.
- While credit performance has improved, some analysts believe the current environment warrants a more balanced risk/reward outlook. This has led to reductions in both ratings and price targets.
- There is skepticism over the sustainability of recent optimism in the mortgage and consumer finance markets, especially with expectations that interest rates will remain elevated into 2026.
What's in the News
- The White House is reportedly exploring the sale of portions of its $1.6 trillion federal student loan portfolio to private companies. This could directly impact SLM and other sector participants (Politico).
- Between July 1, 2025 and September 30, 2025, SLM repurchased 5,631,834 shares for $165.86 million, completing a total buyback of 20,622,012 shares, which represents 9.64% of outstanding shares since January 2024.
Valuation Changes
- Fair Value remains unchanged at $34.73 per share, indicating no adjustment in analysts’ base valuation.
- Discount Rate has decreased modestly from 9.18% to 8.97%, reflecting a slightly lower cost of capital in updated models.
- Revenue Growth projections are steady at 7.10% year-over-year, showing no revision to topline expansion assumptions.
- Net Profit Margin forecast is nearly flat, with a marginal decrease from 45.91% to 45.87%.
- Future P/E ratio has fallen slightly from 9.71x to 9.66x, suggesting minor downward adjustments in valuation multiples.
Disclaimer
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