Last Update 20 Dec 25

Fair value Increased 3.42%

SYF: Future Returns Will Hinge On Benign Credit And Ongoing Buybacks

Analysts modestly raised their price target for Synchrony Financial to approximately $86 from about $83, citing expectations for resilient revenue growth supported by benign credit trends, improving profit margins, incremental buybacks, and positive signals from recent strategic initiatives and sector tailwinds.

Analyst Commentary

Bullish analysts highlight a constructive backdrop for Synchrony Financial, pointing to improving revenue momentum, stable credit quality, and enhanced capital return as key drivers supporting higher valuation multiples. They increasingly view the company as well positioned to benefit from sector tailwinds in consumer finance while executing on strategic growth initiatives.

At the same time, more cautious voices underscore that the stock's outperformance and evolving competitive dynamics in consumer payments warrant a balanced view on risk and reward, particularly as investors assess how sustainable current credit trends and growth rates will prove in a slower macro environment.

Bullish Takeaways

Bullish analysts are nudging price targets higher as they gain confidence that revenue growth will reaccelerate with credit remaining benign, supporting both earnings power and a premium to historical valuation ranges.
Incremental share repurchase capacity and an extended modeling horizon into 2027 are seen as key supports for per share earnings growth, allowing upside even if top line trends are moderate.
Strategic initiatives, including the unwinding of prior credit tightening actions and new growth partnerships such as the launch at Walmart, are expected to expand the customer base and reinforce Synchrony's competitive positioning.
Improving sentiment toward consumer finance and regional banking, helped by lower rate expectations and better near term credit performance, is viewed as a sector tailwind that can narrow the valuation discount versus broader financials.

Bearish Takeaways

Bearish analysts, including JPMorgan, argue that general purpose card issuers offer a more defensive exposure, citing Synchrony's lower placement in the consumer payment hierarchy and higher delinquency rates as reasons for a more neutral stance.
There is concern that recent share price strength has outpaced underlying estimate revisions, raising the risk of multiple compression if revenue growth or credit trends fall short of elevated expectations.
Some investors remain cautious on consumer health heading into upcoming quarters, which could pressure growth in new accounts and spending volumes if labor markets soften further.
The reliance on favorable credit conditions to sustain margin expansion and buyback driven EPS growth leaves limited room for execution missteps or a faster than expected normalization in loss rates.

What's in the News

Deutsche Bank raised Synchrony Financial's price target to $93 from $91 and reiterated a Buy rating after the Q3 report, highlighting confidence in revenue growth with benign credit trends (Deutsche Bank research note).
Synchrony extended its partnership with the American Med Spa Association, introducing preferred CareCredit merchant rates for AmSpa members starting January 1, 2026, to lower transaction costs and expand financing access across more than 24,000 cosmetic and dermatology locations (company client announcement).
Synchrony and Mitsubishi Electric Trane HVAC US renewed their multi year consumer financing alliance effective October 1, 2025, supporting contractors with customizable financing tools as demand grows for smart, energy efficient HVAC systems (company strategic alliance announcement).
The company launched The Toro Company credit card program for Toro, Exmark, Spartan and Z Turf dealers, offering digital application tools, special financing options and advanced underwriting via Synchrony's PRISM system to support repeat spending and dealer sales (company client announcement).
From July 1 to September 30, 2025, Synchrony repurchased 12.1 million shares for $861 million, completing a 20.9 million share, $1.36 billion buyback under the program announced April 22, 2025 (company buyback update).

Valuation Changes

Fair Value Estimate has risen slightly to approximately $85.57 from about $82.74, reflecting a modestly higher intrinsic value assessment.
Discount Rate has edged down marginally to roughly 8.98 percent from about 9.03 percent, implying a slightly lower required return and modestly higher valuation support.
Revenue Growth Assumptions have been reduced moderately to around 17.69 percent from about 19.81 percent, signaling a more measured outlook for top line expansion.
Net Profit Margin has increased meaningfully to approximately 19.04 percent from about 17.97 percent, indicating improved expected profitability and operating leverage.
Future P/E Multiple has ticked up slightly to roughly 10.69x from about 10.40x, suggesting a modestly higher valuation multiple applied to forward earnings.

Strategic partnerships and digital payment product launches with leading retailers are driving recurring revenue, customer retention, and stable earnings.
Investment in advanced analytics, AI, and embedded finance expands operational efficiency, risk mitigation, and promotes sustainable growth across diversified markets.
Shifting consumer behavior, partner concentration, fintech competition, regulatory pressures, and technology investment needs threaten long-term growth, profitability, and market position.

Catalysts

About Synchrony Financial

Operates as a consumer financial services company in the United States.What are the underlying business or industry changes driving this perspective?

Synchrony is set to benefit from the accelerating penetration of digital payments and e-commerce, as shown by new product launches with Amazon (Pay Later) and the Walmart OnePay digital partnership, both of which enable deeper access to online and omnichannel consumer spending and should drive stronger loan receivables and fee income growth over time.
The company's proactive investment in advanced data analytics, AI, and end-to-end digital platforms-including deeper digital integration of new cards with PayPal and Walmart-enhances risk management and operational efficiency, thereby supporting improved net interest margins and lower charge-offs as these technologies mature.
Renewed and expanded long-term strategic partnerships with major retailers and e-commerce platforms such as Amazon and Walmart provide long-term visibility on program revenues and drive customer retention, providing a more stable and recurring revenue base as well as lower earnings volatility.
The company's expansion in high-growth verticals like health, wellness, and pet financing-where it is resuming growth after recent credit tightening-broadens the consumer base and diversifies revenue streams, contributing to more sustainable earnings growth and risk mitigation over the long run.
Synchrony's growing presence in embedded finance and point-of-sale lending, visible through new Buy Now, Pay Later programs and omnichannel financing solutions, positions the company to capitalize on evolving consumer preferences for flexible, tailored financial products-translating into future revenue and market share gains.

Synchrony Financial Earnings and Revenue Growth

Synchrony Financial Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Synchrony Financial's revenue will grow by 21.7% annually over the next 3 years.
Analysts assume that profit margins will shrink from 34.9% today to 19.7% in 3 years time.
Analysts expect earnings to reach $3.3 billion (and earnings per share of $10.46) by about September 2028, up from $3.2 billion today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 10.3x on those 2028 earnings, up from 8.8x today. This future PE is lower than the current PE for the US Consumer Finance industry at 10.5x.
Analysts expect the number of shares outstanding to decline by 4.44% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 9.18%, as per the Simply Wall St company report.

Synchrony Financial Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Elevated payment rates and lower purchase volumes-driven by both recent credit tightening and increasingly selective consumer spending-have resulted in flat or declining loan receivables and net revenue, which could signal structural challenges to long-term growth and future revenue generation.
Continued high concentration of major retail partners (e.g., Walmart, Amazon, PayPal), despite renewals, leaves Synchrony at risk of significant revenue and earnings declines if any major partnership is lost, renegotiated on less favorable terms, or underperforms.
Rising competition from fintechs and alternative payment solutions-including Buy Now, Pay Later offerings like Synchrony's own new Amazon product-can erode demand for traditional credit cards, pressure net interest margins, and reduce Synchrony's ability to grow its customer base and market share with younger, tech-savvy consumers.
Increased regulatory scrutiny (e.g., rules on late fees, APR caps, and consumer protection) combined with anticipated higher compliance and technology investments may raise operating costs and compress net interest margins, directly impacting long-term profitability.
Heavy ongoing investment required in technology (AI, embedded finance, digital integration) to keep pace with evolving consumer preferences and maintain competitiveness may pressure efficiency ratios and limit future earnings growth, especially if revenue does not scale proportionally.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $79.619 for Synchrony Financial based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $100.0, and the most bearish reporting a price target of just $60.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $16.5 billion, earnings will come to $3.3 billion, and it would be trading on a PE ratio of 10.3x, assuming you use a discount rate of 9.2%.
Given the current share price of $76.07, the analyst price target of $79.62 is 4.5% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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