Synchrony, Bread, Ally upgraded, Affirm, PROG cut at BTIG

BTIG upgraded Synchrony Financial (NYSE:SYF) and Bread Financial (NYSE:BFH) to Buy, Ally Financial (NYSE:ALLY) to Neutral and downgraded Affirm Holdings (NASDAQ:AFRM) to Neutral and PROG Holdings (NYSE:PRG) to Sell on Monday after updating its models ahead of Q2 earnings season.

Synchrony (NYSE:SYF) rose 1.1%, Bread (NYSE:BFH) jumped 2.9%, Ally (NYSE:ALLY) gained 1.1%, Affirm (NASDAQ:AFRM) dropped 3.8%, and PROG (NYSE:PRG) slid 3.3% in Monday premarket trading.

Analyst Vincent Caintic said commentary from prime lenders indicate that there’s room to grow their loan books and take market share as they adjust to improving credit losses resulting from tighter underwriting and better-than-feared consumer health.

“The end result of these changing dynamics is that we think the traditional prime point of sale finance providers will be taking more share across the credit spectrum. This is incrementally positive for BFH and SYF,” Caintic wrote in a note to clients.

“Bread (BFH) and Synchrony (SYF), in particular, have benefited from increased pricing over the past year, allowing them to open their credit boxes and to lend to lower-credit customers while keeping better risk adjusted margins,” he said.

On Ally Financial (ALLY), its net interest margin may beat the consensus estimate after the bank aggressively cut deposit rates. “We also wouldn’t be surprised if ALLY guides to a better NCO (net charge-offs) for 2025 on its earnings call, though this improvement in credit guidance appears to be anticipated by the market,” Caintic said.

With the solid outlook for credit card lenders, BTIG downgraded leasing name PROG Holdings (PRG) and Buy Now, Pay Later name Affirm (AFRM).

For PROG (PRG), “we worry that Progressive Leasing will be squeezed by the increasing appetite of the traditional credit cards and point of sale finance providers,” Caintic said.

At Affirm (AFRM), he’s concerned about RLTC (revenue less transaction costs) margin pressure as gross merchandise value growth fails to accelerate. “In our view, increased competition, not only from the traditional credit cards like Synchrony, but also the other fintechs like Buy Now Pay Later, will require Affirm to accept lower margins than what the bull case would require,” the analyst wrote.

The SA Quant system rates Synchrony (SYF) a Strong Buy, Ally (ALLY) and Bread (BFH) Buys, Affirm (AFRM) a Hold, and PROG (PRG) a Sell.