SYF: Future Shareholder Returns Will Depend On Credit Normalization And Buybacks

Analysts have nudged their average price target for Synchrony Financial higher, reflecting expectations for renewed revenue growth, slightly better credit performance, and incremental upside from buybacks and the Walmart program, and now see upside of roughly $10 to $15 per share from recent target increases across the Street.

Analyst Commentary

Bullish analysts are increasingly focused on Synchrony's ability to reignite loan growth while keeping credit trends manageable, leading to a steady march higher in price targets across the group. Many now anchor their upside cases on revenue acceleration, disciplined underwriting, and capital return.

At the same time, a smaller set of cautious voices highlight competitive positioning and consumer credit normalization risks, which they believe warrant more balanced expectations for multiple expansion from here.

Bullish Takeaways

• Bullish analysts expect revenue growth to reaccelerate as Synchrony unwinds prior credit tightening actions and ramps new partnerships such as the Walmart program. They view this as a key growth catalyst embedded in higher outer year targets.
• Improving or benign credit trends, combined with management's constructive commentary through August, support higher earnings forecasts into 2026 and 2027. This is seen as underpinning valuation upside without assuming outsized multiple expansion.
• Incremental buybacks are being factored into models, with several upward target revisions tied to enhanced capital return. This is viewed as supporting EPS growth even in a more modest loan growth environment.
• A more favorable macro backdrop for consumer finance, including expectations for lower rates and stabilizing funding costs, is viewed as reducing downside risk to earnings and justifying higher price targets relative to prior cautious views.

Bearish Takeaways

• Bearish analysts argue that general purpose card issuers may offer better defensive characteristics. They cite Synchrony's potentially lower placement in the consumer payment hierarchy and higher delinquency rates as constraints on premium valuation.
• There is concern that, despite recent credit strength, normalization in delinquencies could pressure returns if growth is pursued too aggressively. This is seen as limiting room for further price target hikes.
• Some see the stock as fairly valued after a strong sector rally, contending that recent share price gains have already priced in much of the deregulation and rate tailwinds. In their view, this leaves less margin for execution missteps.
• Visibility into consumer health through the next credit cycle remains a key watchpoint. Cautious analysts prefer to wait for additional quarters of performance before assigning higher multiples to Synchrony's earnings power.

What's in the News

• Deutsche Bank raised its Synchrony price target to $93 from $91 and reiterated its Buy rating after the Q3 report, citing confidence in returning revenue growth with benign credit trends (Deutsche Bank research note).
• Synchrony renewed its multi year residential consumer financing partnership with Mitsubishi Electric Trane HVAC US, extending a decade long collaboration to support financing for smart, energy efficient HVAC upgrades nationwide (company announcement).
• Synchrony and The Toro Company launched a new Toro branded credit card program to provide dealers and customers with digital applications, special financing options, and advanced underwriting to drive equipment sales and repeat spending (company announcement).
• The company completed a major buyback tranche, repurchasing over 20.9 million shares, or about 5.6% of shares outstanding, for approximately $1.36 billion under the April 2025 authorization (company filing).
• Synchrony expanded its CareCredit ecosystem with new partnerships, including Pumpkin Pet Insurance and mClub, to streamline veterinary reimbursement and offer exclusive financing solutions to independent clinics and pet owners (company announcements).

Valuation Changes

• Fair Value: Unchanged at approximately $82.74 per share, indicating no material adjustment to long term intrinsic value estimates.
• Discount Rate: Fallen slightly from about 9.05% to 9.03%, reflecting a modestly lower assumed cost of equity.
• Revenue Growth: Effectively unchanged at roughly 19.8%, signaling a stable outlook for top line expansion assumptions.
• Net Profit Margin: Risen slightly from about 17.90% to 17.97%, implying a small improvement in expected long term profitability.
• Future P/E: Edged down marginally from approximately 10.45x to 10.40x, indicating a very modest reduction in the valuation multiple applied to forward earnings.