Friday, September 05, 2014 9:57:43 AM
By Anthony Ruben, Inflection Point Consulting Sep. 5, 2014 6:00 AM ET
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Summary
As the 40-day quiet period following Synchrony Financial's July 31 IPO ends next week, expect "Buys" from several "bulge bracket" firms.
Synchrony has already increased 12% over its $23 IPO price, but could have multiple price targets of $30 or more.
Reaffirm "Buy" based on valuation and likely post-research report "pop".
Synchrony Financial (NYSE:SYF), a General Electric (NYSE:GE) split-off, had its IPO on July 31. After treading water near the IPO price of $23.00/share for several days, likely with the support of underwriters, the stock appreciated 8.7% between August 19 and 20, and now sits at $25.79, 12.1% over the IPO price.
Source: Yahoo Finance
To-date, only one report and two estimates have been published. The report, from a non-underwriting firm (BTIG), is a "Buy" with a target price of $30/share.
Lead underwriters must observe, under an SEC rule, a 40-day quite period following an IPO (25 days for non-leads). As thirty-one firms, including bulge bracket investment banks such as Goldman Sachs (NYSE:GS) and JPMorgan (NYSE:JPM), were involved (and compensated) in SYF's IPO, I would expect at least five to seven detailed reports next week. In an early sign of investment banker optimism (and arbitrage on the post-IPO price appreciation), it was reported (as expected) that the overallotment option was exercised (the underwriters purchased, at the IPO price, 3.5 million shares).
Unless the stock runs up significantly prior to the reports, expect "Buys" or "Outperforms" all the way around.
Source: TDAmeritrade
If the current 2015 consensus estimate of $2.74 holds, I would expect target prices in the $31-$33 range. My original estimate was in the $29-$31 range, based on an extrapolation of trailing numbers (see my article, "Synchrony Financial: Why I Bought This GE Spin-Off").
GE has maintained it will continue to hold the 80%+ position it retains until the latter part of 2015. Current plans are for SYF shares to be swapped for GE shares (from existing shareholders) or sold on the open market. Either way, GE benefits from an appreciating SYF.
I continue to be long SYF; however, I will re-consider my holdings following the release of the reports next week.
TRUTH
I've never claimed to have all the answers but feel i'm beginning to corner the market in questions worthy of solutions.
Recent SYF News
- Synchrony and DICK'S Sporting Goods Extend Partnership • PR Newswire (US) • 09/26/2024 12:58:00 PM
- Synchrony to Announce Third Quarter 2024 Financial Results on October 16, 2024 • PR Newswire (US) • 09/25/2024 12:00:00 PM
- Synchrony's CareCredit Network Expands to First-Ever Major Grocery Store Chain Collaboration With Albertsons Companies • PR Newswire (US) • 09/18/2024 01:00:00 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 09/17/2024 08:08:23 PM
- Synchrony Names Dan Colao to Board of Directors • PR Newswire (US) • 09/17/2024 08:05:00 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 09/09/2024 10:35:25 AM
- Synchrony to Participate in the Barclays Global Financial Services Conference • PR Newswire (US) • 09/03/2024 08:00:00 PM
- Unlock Even More Savings with Verizon Visa® Card • GlobeNewswire Inc. • 08/28/2024 01:30:00 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/19/2024 09:24:03 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/19/2024 09:23:42 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/19/2024 09:23:12 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/19/2024 09:23:01 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/19/2024 09:22:40 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/19/2024 09:22:18 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/19/2024 09:22:09 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/19/2024 09:21:58 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/19/2024 09:21:48 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/19/2024 09:21:27 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/19/2024 09:21:07 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/19/2024 09:20:56 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 08/19/2024 04:21:10 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/05/2024 10:40:42 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/05/2024 10:40:33 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/05/2024 10:40:22 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/05/2024 10:40:12 PM
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