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Synchrony Financial (SYF), headquartered in Stamford, Connecticut, is a premier consumer financial services company delivering one of the industry's most complete digitally-enabled product suites. With a market cap of $19.4 billion, the company provides a range of credit products such as credit cards, commercial credit products, and consumer installment loans through programs established with a diverse group of national and regional retailers, local merchants, manufacturers, and more.
Companies worth $10 billion or more are generally described as “large-cap stocks,” and SYF perfectly fits that description, with its market cap exceeding this mark, underscoring its size, influence, and dominance within the credit services industry.
SYF's market leadership is fueled by its vast partner network, which is comprised of national retailers, local merchants, and healthcare providers, and is paired with a robust digital platform. This digital focus aligns with consumer trends and enhances customer engagement.
Despite its notable strength, SYF shares have slipped 8.5% from their 52-week high of $52.67, achieved on Jul. 17. Over the past three months, SYF stock has gained 6.7%, underperforming the Financial Select Sector SPDR Fund’s (XLF) 8.5% gains during the same time frame.
In the longer term, shares of SYF rose 26.2% on a YTD basis and climbed 53.4% over the past 52 weeks, outperforming XLF’s YTD gains of 19.1% and 32.8% returns over the last year.
To confirm the bullish trend, SYF has been trading above its 200-day moving average since November 2023. However, it is trading below its 50-day moving average recently.
SYF's strong performance is driven by higher interest income from credit card loans, offsetting increased credit losses. The company's Health & Wellness platform, particularly CareCredit, is growing through partnerships and collaborations. Its recent partnership with Albertsons Companies, Inc. (ACI) enables cardholders to use their cards for health and wellness purchases at grocery stores. This move supports SYF's strategy to enhance its presence in the health and wellness sector, potentially boosting revenues and contributions from this segment while offsetting declines in others.
On Jul. 17, SYF shares closed up 1% after reporting its Q2 earnings results. Its EPS of $1.55 exceeded Wall Street expectations of $1.35. The company’s net interest income was $4.41 billion, falling short of Wall Street forecasts of $4.44 billion.
In the competitive arena of credit services, American Express Company (AXP) has taken the lead over SYF, showing resilience with a 42.1% uptick on a YTD basis and solid 73.7% gains over the past 52 weeks.
Wall Street analysts are moderately bullish on SYF’s prospects. The stock has a consensus “Moderate Buy” rating from the 22 analysts covering it, and the mean price target of $53.14 suggests a potential upside of 10.2% from current price levels.
On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
