SLM (SLM) Stock Forecast & Price Target

SLM Corp demonstrated solid growth with Private Education Loan (PEL) balances reaching $20.9 billion, representing a 2.2% sequential increase and a 2.9% year-over-year growth, indicating a positive trend in loan origination despite seasonal softness. The company's borrower profile is strengthening, reflected in the increase in the average FICO score to 755 for new loans and a notable rise in the co-sign rate to 88%, which can enhance credit quality and lower risk exposure. Additionally, improved capital flexibility post-CECL phase-in positions SLM Corp favorably for consistent balance sheet growth and the ability to capitalize on future loan sales.

SLM Corp reported a 1.8% sequential decrease in its deposits, falling to $21.1 billion, which signals potential liquidity concerns amid a challenging economic environment. Additionally, the Private Education Loan (PEL) yields declined by 25 basis points to 10.54%, indicating reduced profitability in its core lending business while facing pressures on net interest margin (NIM), which is expected to remain under pressure in the near term due to maturing lower-rate funding. Furthermore, ongoing uncertainty regarding student lending reform raises concerns about potential regulatory impacts, which could adversely affect loan volumes and enrollment activity, leading to higher delinquency and loss rates under a weakened macroeconomic scenario.