Navient Corp (NASDAQ:NAVI) shares have been downgraded from Buy to a Hold rating by analyst Kessler of S&P Capital IQ. He also reduced his price target on the stock by $3 a share to $16.00. This suggested that the stock is fairly priced at current levels. The move came on the back of the company’s earnings miss for the fourth quarter.
Kessler indicated that he took a median forward PE of 9.8X and a PE to growth of 1.2 for reaching his price objective on Navient shares. With the help of these metrics, allowing for discounts on notable legal matters apart from averaging the output results in his target, he also reduced his EPS estimate for the year 2017.
Accordingly, he now estimates EPS to be $1.84 compared to $3.10 estimated earlier for the current year. Kessler also established his EPS estimate at $1.82 for the year 2018. His revision came after Navient reported core EPS of 43 cents, which was below the Capital IQ consensus by a penny.
He pointed out that net interest income dropped 29 percent hurt by an 11 percent fall in private education loans, as well as, a 25 percent jump in interest costs. In a research note to clients, Kessler viewed, “We note legal actions recently taken by the CFPB and state attorneys general against NAVI.”
On Thursday’s pre-market trading, the stock traded up 4.90 percent.