Navient swings to Q3 core profit on loan-sale gains, fair-value benefits

Overview

• Education finance firm's Q3 revenue fell sequentially

• Navient swung to core profit for the period

Outlook

• Navient did not provide specific financial guidance for upcoming quarters or full year in its press release

Result Drivers

• LOAN SALE AND FAIR VALUE GAINS – Sale of $750 mln of Legacy Private Education Loans generated a $162 mln gain; fair value election for In-School originations added $23 mln

• CREDIT-LOSS PROVISIONS – Provisions rose $59 mln to $227 mln, mainly on delinquencies and charge-offs expected to remain elevated longer than anticipated

• OPERATING-COST REDUCTIONS – Operating expenses fell $30 mln, helped by lower transition-services and regulatory costs, insurance proceeds and cost-saving initiatives

Company press release:

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 1 "strong buy" or "buy", 3 "hold" and 2 "sell" or "strong sell"

• The average consensus recommendation for the consumer lending peer group is "buy."

• Wall Street's median 12-month price target for Navient Holdings, Inc. is $9.00, about 9% above its November 3 closing price of $8.26

• The stock recently traded at 9 times the next 12-month earnings vs. a P/E of 10 three months ago

Reuters Recommended Reads

• Nov 3 - Oportun Financial's Q3 revenue beats estimates on higher originations in lower-risk segments

• Nov 4 - Velocity Financial Q3 core EPS beats on strong loan demand

• Nov 4 - Neobank Dave's Q3 revenue jumps on new member acquisition

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(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)