With Growth Comes Increased Expenses and Retailer Dependence at Synchrony; Shares Mildly Undervalued
After transferring coverage to a new analyst, we are decreasing Synchrony Financial’s fair value estimate to $30 from $40. While we are still positive on Synchrony and think it’s mildly undervalued, we are increasingly concerned that expenses tied to loyalty rewards and retail partnerships will continue to increase. Credit card receivables have drawn a lot of investor interest in the past 18 months, and the price to acquire new credit card portfolios has risen. We believe this will moderately da...Synchrony Financial is a savings and loan holding company and financial holding company. Through its subsidiaries, the company delivers a range of financing programs, as well as consumer banking products, across key industries including digital, retail, home, auto, travel, health and pet. The company provides a range of credit products through its financing programs which it has established with a group of national and regional retailers, local merchants, manufacturers, buying groups, industry associations and healthcare service providers, which it refers to as its partners. Through its partners, the company provides their customers a variety of credit products to finance the purchase of goods and services.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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